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| Houghton Company began business on January 1, 2015 by issuing all of its 1,150,000 authorized shares of its $1 par value common stock for $22 per share. On June 30, Houghton declared a cash dividend of $1.50 per share to stockholders of record on July 31. Houghton paid the cash dividend on August 30. On November 1, Houghton reacquired 230,000 of its own shares of stock for $27 per share. On December 22, Houghton resold 115,000 of these shares for $33 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 accou |
Expert Answer
| Date | Particulars | Debit | Credit |
| 01.01.2015 | Bank (1,150,000*22) Dr. | 25,300,000 | |
| To Common Stock (1150000*1) | 1,150,000 | ||
| To Paid in capital in excess of par value | 24,150,000 | ||
| (Being common stock issued) | |||
| 31.07.2015 | Retained Earning (1150000*1.5) Dr. | 1,725,000 | |
| To Dividend Payable | 1725000 | ||
| (Being declared cash dividend) | |||
| 30.08.2015 | Dividend Payable Dr | 1725000 | |
| To Cash | 1725000 | ||
| (Being dividend paid) | |||
| 01.11.2015 | Treasury stock (230000*27) | 6210000 | |
| To Cash | 6210000 | ||
| (Being require his own shares) | |||
| 22.12.2015 | Common Stock Dr. | 115000 | |
| Additional paid in capital | 3680000 | ||
| To Treasury Stock | 3795000 | ||
| (Being common stock sold) |
