1. During its first year of operations, Eastern Data Links Corporation entered into the following transactions relating to shareholders’ equity. The articles of incorporation authorized the issue of 8 million common shares, $1 par per share, and 1 million preferred shares, $50 par per share.
Prepare the appropriate journal entries to record each transaction.
2. Borner Communications’ articles of incorporation authorized the issuance of 130 million common shares. The transactions described below effected changes in Borner’s outstanding shares. Prior to the transactions, Borner’s shareholders’ equity included the following:
($ in millions)
Common stock, 100 million shares at $1 par $100
Paid in capital--excess of par $ 300
Retained earnings $ 210
Required:
Assuming that Borner Communications retires shares it reacquires (restores their status to that of authorized but unissued shares), record the appropriate journal entry for each of the following transactions:
1. On January 7, 2013, Borner reacquired 2 million shares at $5.00 per share.
2. On August 23, 2013, Borner reacquired 4 million shares at $3.50 per share.
3. On July 25, 2014, Borner sold 3 million common shares at $6 per share.