Question

Pharoah Company had the following Shareholders’ Equity accounts as of May 1, 2020: Share capital:       Preferred...

Pharoah Company had the following Shareholders’ Equity accounts as of May 1, 2020:

Share capital:
      Preferred shares, 50,000 issued and outstanding $640,000
      Class A common shares, 50,000 issued and outstanding 285,000
      Class B common shares, 360,000 issued and outstanding 2,160,000
Retained earnings 3,305,000
      Total shareholders’ equity $6,390,000


On June 10, Pharoah reacquired and cancelled 1,900 Class A common shares at a cost of $4.95 per share. On August 26, 2020, Pharoah issued 3,800 Class A common shares for $8.90 each. On September 30, the company reacquired and cancelled another 1,900 Class A common shares at $8.90 per share.

Q:

Prepare the journal entries required to record these transactions. (Round per share value to 4 decimal places, e.g. 1.2512 and final answer to 0 decimal places, e.g. 5,275.)

Date

Account Titles and Explanation

Debit

Credit

Sept. 30
Business   Accounting   
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Answer #1

Solution:

Shamrock Company
Date Account Title Debit Credit
10-Jun Class A Common Stock ($285000/50000*1900) 10830
      Retained earnings 1425
      Cash (1900*$4.95) 9405
26-Aug Cash (3800*$8.90) 33820
     Common Stock 33820
30-Sep Class A Common Stock
[($285000- 10830+ 33820)/(50000-1900+3800)]/1900		 11275
Retained earnings 5635
      Cash (1900*$8.90) 16910
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