Question

Elysium Corp. had the following relevant account balances at 1/1/17:

Common stock ($1 par value, 100,000 shares issued and 87,000

outstanding at 1/1/17)

$100,000

Additional Paid-in Capital – CS

$4,200,000

7% Preferred stock ($500 par value, 25,000 shares issued and

outstanding)

$12,500,000

Treasury Stock

689,000

Additional Paid-in Capital – TS

0

Retained Earnings

$137,783,000

The following transactions occurred during 2017.

?

Elysium reissued 7,000 shares of treasury stock at an issue price of $73 a share.

?

Elysium declared a 10% stock dividend when the share price of its common stock was $71.

?

Elysium declared and paid a $1,800,000 to common and preferred shareholders. The preferred

shares had no dividends in arrears.

?

Elysium repurchased 15,000 shares at $65 a share.

Answer the following questions:

A. Provide journal entries for each of the above transactions.

B. If the common stock had been issued in one issue, what was the price per share at the date of

issue?

C. What was the cost of the shares in treasury at 1/1/17?

D. What is the dividend per share paid to common shareholders?

E.

What were the shares issued and outstanding at 12/31/17?

Answer 1

Answer A.
Journal Entry
Date	Particulars	Dr. Amt.	Cr. Amt.
1	Cash	511,000.00		7,000 Shares X $73
	Treasury Stock		371,000.00	($689,000 / 13,000) X 7,000
	Additional Paid-in Capital - TS		140,000.00	$511,000 - $371,000
	(To record the issue of Treasury Stock)
2	Stock Dividend	667,400.00		94,000 Shares X 10% X $71
	Stock Dividends Payable		9,400.00	9,400 Shares X $1
	Additional Paid-in Capital - CS		658,000.00	9,400 Shares X $70
	(to record the stock dividend declared)
3	Cash Dividend - Preferred	875,000.00		$12,500,000 X 7%
	Cash Dividend - Common	925,000.00		$1,800,000 - $875,000
	Cash		1,800,000.00
	(To record the dividend paid
4	Treasury Stock	975,000.00		15,000 Shares X $65
	Cash		975,000.00
	(To record the repurcahse of 15,000 shares)

Answer B.
Issue Price of Common Shares = ($100,000 + $4,200,000) / 100,000 Shares
Issue Price of Common Shares = $43 per share
Answer C.
Cost per Treasury Share = $689,000 / 13,000 Shares
Cost per Treasury Share = $53 per share
Answer D.
Cash Dividend Per Share = $925,000 / 94,000 Shares
Cash Dividend Per Share = $9.84 per share (Approx.)
Assuming Stock Dividend in not paid.
Answer E.
Shares Issued = 100,000
Shares Outstanding = 87,000 shares + 7,000 shares - 15,000 Shares
Shares Outstanding = 79,000 Shares