37 Florida Travel Inc issues 5000 shares of 5 pa r value com

37. Florida Travel Inc. issues 5,000 shares of $5 pa r value common stock for ). The journal entry to record this issuance would include: A) a debit to Paid-in Capital in Excess of Par of $60,000 B)a credit to Paid-in Capital in Excess of Par of $60,000 el D) E) a credit to Common Stock for $25,000 and a debit to cash for $85,000 A) and C) B) and C) 38. Saddleback Manufacturing Ltd. Purchased 5,000 shares of its own previously issued $10 par value common stock for $95,000. As a result of this event, Saddleback Manufacturing Ltd\'s Stockholder\'s Equity Section on the Balance would reflect what? A) Saddleback\' s Common Stock account balance would reflect a decrease of $50,000 B) Saddleback\'s Stockholder\'s Paid-in Capital account balance would reflecta C) Saddleback\'s total Stockholder\'s Equity balance would reflect a decrease D) None of the above. decrease of $95,000. $95,000.

Solution

37. Answer: Option E) B) and C)

The journal entry is:

38. Answer: Option C) Saddleback\'s total Stockholder\'s Equity balance would reflect a decrease of $95000.

The cost of $95000 at which stock is re-acquired is reported as a deduction from the stockholder\'s equity thereby reflecting a decrease of $95000 in the total stockholder\'s equity.

Account Titles and Explanation	Debit	Credit
Cash	85000
Common stock (5000 shares x $5)		25000
Paid-in capital in excess of par		60000