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Cal Cookie Company (CCC) has 100 million shares of $1 par common stock authorized. The transactions below caused changes in CCC's outstanding shares.
January 4, 2016 Repurchased and retired 1 million shares at $8 per share
June 25, 2016 Repurchased and retired 2 million shares at $2 per share
Prior to the transactions, CCC's shareholder's equity included the following:
Common stock, 80 million shares at $1 par $80,000,000
Paid-in-Capital - excess of par160,000,000
Retained Earnings 120,000,000
Required:
Record entries for the above transactions. Please show work

Sagot :

Answer and Explanation:

The journal entries are shown below:

On January 4, 2016

Common capital (1 million ×  $1 per share) $1,000,000

Paid in capital excess of par (1 million × $160,000,000 ÷ $80,000,000) $2,000,000

Retained earnings (difference) $5,000,000

          To Cash (1 million × $8) $8,000,000

(Being repurchase & retired shares are recorded)

On June 25,2016

Common capital (2 million × $1 per share) $2,000,000

Paid in capital excess of par ( 2 million × $2) $4,000,000

         To Cash (2 million × $2) $4,000,000

         To Retained earnings (difference) $2,000,000

(Being repurchase & retired shares are recorded)

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