Kenya Corporation had an equity structure that consisted of $1 par value common stock, $3,500,000; paid-in capital
Question:
Kenya Corporation had an equity structure that consisted of $1 par value common stock, $3,500,000; paid-in capital in excess of par, $17,500,000; and retained earnings, $22,700,000.
(a) Assuming that all 3,500,000 shares of Kenya were issued at the same time and at the same price per share, what was the original issue price? How does this compare to the price paid in Transaction A, and is it rational for a company to pay more to buy back shares than it originally received upon the initial issuance?
(b) Prepare an appropriate journal entry to record Transaction A. Kenya records treasury shares at cost.
(c) Prepare an appropriate journal entry for Transaction B.
(d) Prepare an appropriate journal entry for Transaction C.
(e) Is there any income statement impact from these transactions? What is the impact on total stockholders’ equity from each of the three transactions?
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