Question

Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2018. Power Drive has the following transactions affecting stockholders' equity in 2018.

March 1 Issues 59,000 additional shares of $1 par value common stock for $56 per share.

May 10 Purchases 5,400 shares of treasury stock for $59 per share.

June 1 Declares a cash dividend of $1.70 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.)

July 1 Pays the cash dividend declared on June 1.

October 21 Reissues 2,700 shares of treasury stock purchased on May 10 for $64 per share.

Required:

Record each of these transactions.

Answer 1

Record each of these transactions.

Date	accounts & explanation	debit	credit
Mar 1	Cash	3304000
	Common stock		59000
	Paid in capital in excess of par value-common stock		3245000
	(To record issue common stock)
mar 10	Treasury stock (5400*59)	318600
	Cash		318600
	(To record treasury stock purchased)
June 1	Cash dividend (159000-5400*1.70)	261120
	Cash dividend payable		261120
	(To record dividend declared)
June 15	No entry
July 1	Cash dividend payable	261120
	Cash		261120
	(To record dividend paid)
Oct 21	Cash (2700*64)	172800
	Treasury stock (2700*59)		159300
	Paid in capital from sale of treasury stock		13500
	(To record sale of treasury stock)