Beruflich Dokumente
Kultur Dokumente
LO18–4
During its first year of operations, Eastern Data Links Corporation entered into the following
transactions relating to shareholders’ equity. The articles of incorporation authorized the issue of
8 million common shares, $1 par per share, and 1 million preferred shares, $50 par per share.
Required:
Prepare the appropriate journal entries to record each transaction.
February 12
Cash (2M shares x 9 per share) 18,000,000
Common stock (2M shares x 1 par) 2,000,000
Paid-in-capital – excess of par (difference) 16,000,000
February 13
Legal expenses (40,000 shares x 9 per share) 360,000
Common stock (40,000 shares x 1 par) 40,000
Paid-in-capital – excess of par (difference) 320,000
13 Sold 80,000 of its common shares and 4,000 preferred shares for a total of $945,000.
February 13
Cash 945,000
Common stock (80,000 shares x 1 par) 80,000
Paid-in-capital – excess of par, common 640,000
Preferred stock (4,000 shares x 50 par) 200,000
Paid-in-capital – excess of par, preferred 25,000
Nov. 15 Issued 380,000 of its common shares in exchange for equipment for which the cash
price was known to be $3,688,000.
November 15
Property, plant, and equipment (cash value) 3,688,000
Common stock (380,000 shares x 1 par per share) 380,000
Paid-in-capital – excess of par (difference) 3,308,000
Page 1 of 4
E 18–11: Retirement of shares
LO18–5
Borner Communications’ articles of incorporation authorized the issuance of 130 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:
1. On January 7, 2013, Borner reacquired 2 million shares at $5.00 per share.
Jan. 7, 2013
Common Stock (2M shares x 1 par) 2,000,000
Paid-in-capital – excess of par (2M shares x 3) 6,000,000
Retained earnings (difference) 2,000,000
Cash (2M shares x 5 per share) 10,000,000
2. On August 23, 2013, Borner reacquired 4 million shares at $3.50 per share.
3. On July 25, 2014, Borner sold 3 million common shares at $6 per share.
Page 2 of 4
E 18–13: Treasury stock
LO18–5
In 2013, Western Transport Company entered into the treasury stock transactions described
below. In 2011, Western Transport had issued 140 million shares of its $1 par common stock at
$17 per share.
Required:
Prepare the appropriate journal entry for each of the following transactions:
1. On January 23, 2013, Western Transport reacquired 10 million shares at $20
per share.
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E 18–19: Stock dividend
LO18–8
The shareholders’ equity of Core Technologies Company on June 30, 2012, included the
following:
On April 1, 2013, the board of directors of Core Technologies declared a 10% stock dividend on
common shares, to be distributed on June 1. The market price of Core Technologies’ common
stock was $30 on April 1, 2013, and $40 on June 1, 2013.
Required:
Prepare the journal entry to record the distribution of the stock dividend on the declaration date.
April 1, 2013
Retained earnings (300 shares x 30 per share) 9,000,000
Common stock dividends distributable (300 shares x 1 paper share) 300,000
Paid-in-capital – excess of par (remainder) 8,700,000
June 1, 2013
Common stock dividends distributable 300,000
Common stock 300,000
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