Question - On January 1, 2016, Metco, Inc., reported 271,000 shares of $7 par value common stock as being issued and outstanding. On March 15, 2016, Metco, Inc., purchased for its treasury 2,700 shares of its common stock at a price of $39.00 per share. On August 10, 2016, 600 of these treasury shares were sold for $45.50 per share. Metco's directors declared cash dividends of $0.50 per share during the second quarter and again during the fourth quarter, payable on June 30, 2016, and December 31, 2016, respectively. A 5% stock dividend was issued at the end of the year. There were no other transactions affecting common stock during the year.
Required:
a-1. Use the horizontal model for the treasury stock purchase on March 15, 2016.
a-2. Prepare the journal entry for the treasury stock purchase on March 15, 2016.
b. Calculate the total amount of the cash dividends paid in the second quarter.
c-1. Use the horizontal model for the sale of the treasury stock on August 10, 2016.
c-2. Prepare the journal entry for the sale of the treasury stock on August 10, 2016.
d. Calculate the total amount of cash dividends paid in the fourth quarter.
e. Calculate the number of shares of stock issued in the stock dividend.