Mageco has 1,000,000 shares of its no par value common stock authorized and has issued all...

 

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Mageco has 1,000,000 shares of its no par value common stock authorized and has issued all of it. The company wants to start an employee stock purchase plan so that the employees will be incentivized to continue employment with the company. To do that it must obtain from the state of Delaware which the company is incorporated, an authorization for more stock. The corporate law in Delaware requires that to approve additional authorization of common stock a vote must be taken by the common stockholders to issue more common stock. That would require the majority of the companies common stockholder. The Board of Directors of Mageco Inc. does not want to take a chance of not having enough votes to approve the additional authorization of common stock shares. They have instead decided to start buying stock in the stock market and holding it as treasury stock. On May 1, 2021, the company purchased 60,000 shares of its common stock in the stock market for $36 per share. In July 2021 the company had a cash flow problem and decided to sell some of the treasury stock. On July 28, 2021, they sold 6,000 shares at $43 per share. Again in October 2021, the company had another cash flow issue was forced to sell 5,000 shares at $31 per share on October 18, 2021. Required: make the entries on May 1, 2022, July 28 2021 and on October 18, 2021. DATE 5/1/2022 ACCOUNT DR CR Mageco has 1,000,000 shares of its no par value common stock authorized and has issued all of it. The company wants to start an employee stock purchase plan so that the employees will be incentivized to continue employment with the company. To do that it must obtain from the state of Delaware which the company is incorporated, an authorization for more stock. The corporate law in Delaware requires that to approve additional authorization of common stock a vote must be taken by the common stockholders to issue more common stock. That would require the majority of the companies common stockholder. The Board of Directors of Mageco Inc. does not want to take a chance of not having enough votes to approve the additional authorization of common stock shares. They have instead decided to start buying stock in the stock market and holding it as treasury stock. On May 1, 2021, the company purchased 60,000 shares of its common stock in the stock market for $36 per share. In July 2021 the company had a cash flow problem and decided to sell some of the treasury stock. On July 28, 2021, they sold 6,000 shares at $43 per share. Again in October 2021, the company had another cash flow issue was forced to sell 5,000 shares at $31 per share on October 18, 2021. Required: make the entries on May 1, 2022, July 28 2021 and on October 18, 2021. DATE 5/1/2022 ACCOUNT DR CR

Answer rating: 100% (QA)

Journal entries Date ACCOUNT DR CR 512021 Treasury stock 2160000 Cash 2160000 To record purchas... View the full answer