SOUTHWEST..ESSEN.OF TAX.2020 W/CENGNOWV
23rd Edition
ISBN: 9780357251881
Author: Raabe
Publisher: Cengage Learning
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I need help with this financial accounting question using the proper financial approach.
Ocean Corp. has a single class of shares. As its year ended December 31, 2025, the company had 5,000,000 shares issued and outstanding. On the stock exchange, these shares were trading at around $7. In the company's accounts, these shares had a value of $50,000,000. The equity accounts also show $650,000 of contributed surplus from previous repurchases of shares.
On January 15, 2026, Ocean repurchased and cancelled 250,000 shares at a cost of $7 per share. Later in the year, on August 20, the company repurchased and cancelled a further 475,000 shares at a cost of $14 per share.
Required
Record the journal entries for the two share transactions in 2026.
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- In 2027 Palm Tree Inc. declared $1,000,000 in cash dividends. Its capital structure includes 300,000 common shares; 200,000 cumulative preferred shares "A" each entitled to an annual dividend of $1.00; and 50,000 non-cumulative preferred shares "B" each entitled to an annual dividend of $3.00. The prescribed dividends on both series of preferred shares were last declared and paid in 2025. Required Use the following facts to determine how much each of the three classes of shares receives of the $1,000,000 cash dividend.arrow_forwardI am looking for the correct answer to this financial accounting question with appropriate explanations.arrow_forwardPlease explain the solution to this financial accounting problem using the correct financial principles.arrow_forward
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