Several years ago Douglas Company issued 33000 shares of its

Several years ago, Douglas Company issued 33,000 shares of its $1 par value common stock for $18 per share. In the current year, Douglas’s board of directors approves a plan to buy back a portion of these common stock shares. Prepare journal entries for each of the following transactions and events.

a. On Monday, Douglas buys back 2,500 shares for $35 per share.

b. On Tuesday, Douglas reissues 1,000 shares of treasury stock for $37 per share.

c. On Wednesday, Douglas reissues 500 shares of treasury stock for $34 per share.

d. On Thursday, Douglas reissues 600 shares of treasury stock for $28.

e. On Friday, the board of directors declares a cash dividend of $1.00 per share.

Solution

Number Journal Entries Debit Credit a Share Capital Account           2,500.00 Additional Paid in Capital Account         42,500.00 General Reserve/Retained Profit Account         42,500.00 Cash/Bank Account     87,500.00 (Buys back 2,500 shares for $35 per share, where the par value is $1 and share premium per share is $ 17) b Cash/Bank Account         37,000.00 Treasury Stock Account     37,000.00 Reissues 1,000 shares of treasury stock for $37 per share. c Cash/Bank Account         17,000.00 Treasury Stock Account     17,000.00 Reissues 500 shares of treasury stock for $34 per share. d Cash/Bank Account         16,800.00 Treasury Stock Account     16,800.00 Reissues 600 shares of treasury stock for $28 e Dividend Account         30,500.00 Dividend Payable Account Declares a cash dividend of $1.00 per share (30500 Shares @ $ 1)     30,500.00 Working -J/E (a) Number of Shares Per Share Total Amount Cash/Bank Account 2500 35       87,500.00 Additional Paid in Capital Account 2500 -17      (42,500.00) Share Capital Account 2500 -1        (2,500.00) General Reserve/Retained Profit Account 2500 17       42,500.00