Explanation Common stock : These are the ordinary shares that a corporation issues to the investors in order to raise funds. In return, the investors receive a share of profit from the profits earned by the corporation in the form of dividend. Treasury Stock : It refers to the shares that are reacquired by the corporation that are already issued to the stockholders, but reacquisition does not signify retirement. Retained earnings : Retained earnings are the portion of earnings kept by the business after payment of dividend, for the purpose of reinvestments, payment of debts, or for future growth. Cash dividend : The amount of cash provided by a corporation out of its distributable profits to its shareholders as a return for the amount invested by them is referred as cash dividends. Journalize all of Company P’s stockholders’ equity transactions during the year as follows: Transaction Accounts title and explanation Debit ($) Credit ($) a. Cash ( 59,000 shares × $9 market value per share ) 531,000 Common Stock ( 59,000 shares × $1 Par value per share ) 59,000 Paid-in Capital in excess of Par-Common stock ( $ 531 , 000 − $ 59 , 000 ) 472,000 (To record issuance of common stock) b. Treasury stock ( 800 shares × $ 12 purchase price per share ) 9,600 Cash 9,600 (To record purchase of treasury stocks) c. Cash 7,500 Treasury stock 6,000 Paid-in capital form treasury stock 1,500 (To record re-selling of treasury stock ) Revenues 172,000 Expenses 110,000 Retained earnings 62,000 (To record closing net income to retained earnings ) d. Retained earnings 22,000 Cash 22,000 (To record declaration and payment of cash dividends) Working Note for transaction c: Calculate the value of treasury stock sold. Treasury stock sold = Treasury stock bought − Closing balance of treasury stock = $9,600 − $3,600 = $6,000 Calculate the value of paid in capital from treasury stock

Financial Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (12th Edition)

12th Edition

ISBN: 9780134833156

Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.

Publisher: PEARSON

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Chapter 10, Problem 10.92CEP

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To journalize: All of Company P’s stockholders’ equity transactions during the year.

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Chapter 10, Problem 10.91BP

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Financial Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (12th Edition)

Ch. 10 - The two main categories of stockholders equity are...Ch. 10 - Prob. 2QC Ch. 10 - Stockholders of a corporation directly elect the...Ch. 10 - The par value of a share of common stock a. is...Ch. 10 - Prob. 5QC Ch. 10 - If a corporation issues 1,000 shares of 1 par...Ch. 10 - Prob. 7QC Ch. 10 - Sandusky Corporation purchased 3,000 shares of its...Ch. 10 - Graves Corporation issued 50,000 shares of 1 par...Ch. 10 - Prob. 10QC

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To journalize: All of Company P’s stockholders’ equity transactions during the year.

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