Ask Question
5 September, 08:08

Knapp Industries began business on January 1, 2018 by issuing all of its 1,000,000 authorized shares of its $1 par value common stock for $40 per share. On June 30, Knapp declared a cash dividend of $2 per share to stockholders of record on July 31. Knapp paid the cash dividend on August 30. On November 1, Knapp reacquired 200,000 of its own shares of stock for $50 per share. On December 22, Knapp resold 100,000 of these shares for $60 per share.

Prepare all of the necessary journal entries to record the events described above.

+3
Answers (1)
  1. 5 September, 09:26
    0
    Answer and Explanation:

    The Journal entry with their narrations is shown below:-

    1. Cash account Dr, $40,000,000

    ($40 * $1,000,000)

    To Common stock $1,000,000

    To Paid-in-capital in excess of par $39,000,000

    (Being issue of common shares is recorded)

    2. Retained earnings Dr, $2,000,000

    To Dividend payable $2,000,000

    (1,000,000 * $2)

    (Being the declaration of the cash dividend on June 30 is recorded)

    3. Dividend payable Dr, $2,000,000

    To Cash account $2,000,000

    (Being the payment of cash dividend on July 30 is recorded)

    4. Treasury stock Dr, $10,000,000

    (200,000 * $50)

    To Cash account $10,000,000

    (Being the reacquire of its own share on November 1, is recorded)

    5. Cash account Dr, $6,000,000

    (100,000 * $60)

    To Treasury stock $5,000,000

    To Paid-in-capital-treasury stock $100,000

    (Being the resale of treasury shares on December 22 is recorded)
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Knapp Industries began business on January 1, 2018 by issuing all of its 1,000,000 authorized shares of its $1 par value common stock for ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers