Question

Borner Communications’ articles of incorporation authorized the issuance of 150 million common shares. The transactions described below effected changes in Borner’s outstanding shares. Prior to the transactions, Borner’s shareholders’ equity included the following:

Required:

Assuming that Borner Communications retires shares it reacquires (restores their status to that of authorized but unissued shares), record the appropriate journal entry for each of the following transactions: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

1.	On January 7, 2016, Borner reacquired 2 million shares at $5.00 per share.
2.	On August 23, 2016, Borner reacquired 4 million shares at $2.50 per share.
3.	On July 25, 2017, Borner sold 3 million common shares at $5 per share

1 Record the reacquisition of 2 million shares by Borner.
2 Record the reacquisition of 4 million shares by Borner.
3 Record the sale of 3 million common shares.

Answer 1

Solution:-

1 Record the reacquisition of 2 million shares by Borner:-

Particulars	Debit	Credit
Common Stock (2 million shares * 1 par)	2,000,000
Paid in capital in excess of par (2 million share * 3)	6,000,000
Retained earnings (differance)	2,000,000
Cash (2,000,000 shares * 5 per share)		10,000,000

2 Record the reacquisition of 4 million shares by Borner:-

Particulars	Debit	Credit
Common Stock (4 million shares * 1 par)	4,000,000
Paid in capital in excess of par (4 million share * 3)	12,000,000
Paid in capital (share repurchase differance)		6,000,000
Cash (4,000,000 shares * 2.50 per share)		10,000,000

3 Record the sale of 3 million common shares:-

Particulars	Debit	Credit
Cash (3 million * 5 per share)	15,000,000
Common stock (3 million * 1 par)		3,000,000
Paid in capital (share excess of par differance)		12,000,000