22 200 points value Houghton Company began business on Janua

22. 200 points value: Houghton Company began business on January 1, 2015 by issuing all of its 1,850,000 authorized shares of its $1 par value common stock for $36 per share. On June 30, Houghton declared a cash dividend of $2.75 per share to stockholders of record on July 31. Houghton paid the cash dividend on August 30. On November 1, Houghton reacquired 370,000 of its own shares of stock for $41 per share. On December 22 Houghton resold 185,000 of these shares for $47 per share Required a. Prepare all of the necessary journal entries to record the events described above. (If no entry is required for a transaction/event, select \"No Journal Entry Required\" in the first account field.) View transaction list Journal entry worksheet 2 4 Record the issue of 1,850,000 authorized shares of $1 par value for $36 per share Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal

Solution

Houghton Company

Houghton Company

Journal Entries

Date

Account Titles and Explanation

Ref. No.

Debit

Credit

1-Jan-15

Cash

$66,600,000

Common Stock

$1,850,000

Paid-in-Capital, Common Stock

$64,750,000

(To record the issue of 1,850,000 shares at $36 per share,1 par value and $35 paid-in capital, in excess of par)

30-Jun-15

Retained Earnings

$5,087,500

Dividends Payable

$5,087,500

(To record declaration of cash dividend of $2.75 per share on 1,850,000 shares; 1,850,000 x $2.75 = $5,087,500)

30-Aug-15

Dividends Payable

$5,087,500

Cash

$5,087,500

(To record payment of cash dividend)

1-Nov-15

Treasury Stock

$15,170,000

Cash

$15,170,000

To record reacquisition of 370,000 shares at $41 per share)

22-Dec-15

Cash

$8,695,000

Treasury Stock

$7,585,000

Paid-in-Capital - Treasury Stock

$1,110,000

(To record resale of185,000 shares of treasury stock at $41 per share, and the excess above cost of shares as paid-in capital)

Houghton Company

Stockholders\' Equity Section of the Balance Sheet

as of December 31, 2015

Common Stock, 1,850,000 shares issued at $1 par value

$1,850,000

Paid-in Capital in excess of par value, Common

$64,750,000

Paid-in-Capital, in excess of par - Treasury Stock

$1,110,000

Retained Earnings

$5,912,500

Less: Treasury stock, at cost

($7,585,000)

Stockholders\' Equity

$66,037,500

Note –

Retained earnings amount is computed as follows,

Net income for 2015 $11,000,000

Less: Cash dividend$5,087,500

Retained Earnings as of December 31, 2015 = $5,912,500

	Houghton Company
	Journal Entries
Date	Account Titles and Explanation	Ref. No.	Debit	Credit
1-Jan-15	Cash		$66,600,000
	Common Stock		$1,850,000
	Paid-in-Capital, Common Stock	$64,750,000
	(To record the issue of 1,850,000 shares at $36 per share,1 par value and $35 paid-in capital, in excess of par)
30-Jun-15	Retained Earnings	$5,087,500
	Dividends Payable		$5,087,500
	(To record declaration of cash dividend of $2.75 per share on 1,850,000 shares; 1,850,000 x $2.75 = $5,087,500)
30-Aug-15	Dividends Payable	$5,087,500
	Cash			$5,087,500
	(To record payment of cash dividend)
1-Nov-15	Treasury Stock	$15,170,000
	Cash			$15,170,000
	To record reacquisition of 370,000 shares at $41 per share)
22-Dec-15	Cash		$8,695,000
	Treasury Stock		$7,585,000
	Paid-in-Capital - Treasury Stock	$1,110,000
	(To record resale of185,000 shares of treasury stock at $41 per share, and the excess above cost of shares as paid-in capital)