Treasury Stock
The Stockholders' Equity section of Preston Enterprises' balance sheet on January 1, 2017, appeared as follows:
Common stock, $10 par, 10,000 shares issued and outstanding | $100,000 |
Additional paid-in capital | 50,000 |
Retained earnings | 80,000 |
Total stockholders’ equity | $230,000 |
Required:
1. Identify and analyze the effect of each transaction.
The following transactions occurred during 2017:
a. Reacquired 1,400 shares of common stock at $20
per share on July 1.
Activity | |
Accounts | |
Statement(s) |
How does this entry affect the accounting equation?
If a financial statement item is not affected, select "No Entry"
and leave the amount box blank. If the effect on a financial
statement item is negative, i.e, a decrease, be sure to enter the
answer with a minus sign.
Balance Sheet | Income Statement | ||||||||||||||
Stockholders' | Net | ||||||||||||||
Assets | = | Liabilities | + | Equity | Revenues | – | Expenses | = | Income | ||||||
b. Reacquired 450 shares of common stock at $18 per share on August 1.
Activity | |
Accounts | |
Statement(s) |
How does this entry affect the accounting equation?
If a financial statement item is not affected, select "No Entry"
and leave the amount box blank. If the effect on a financial
statement item is negative, i.e, a decrease, be sure to enter the
answer with a minus sign.
Balance Sheet | Income Statement | ||||||||||||||
Stockholders' | Net | ||||||||||||||
Assets | = | Liabilities | + | Equity | Revenues | – | Expenses | = | Income | ||||||
2. Assume that the company resold the shares of
treasury stock at $28 per share on October 1.
The resale price of the treasury stock is $51,800, which when
compared to its original cost, yielded in the
amount of $. This is shown on the balance sheet as
a(n) in the account.
Common stock, $10 par, 10,000 shares issued and outstanding | $100,000 | ||||||||||
Additional paid in capital | $50,000 | ||||||||||
Retained earnings | $80,000 | ||||||||||
Total Stockholders' equity | $230,000 | ||||||||||
1. (a) | Reaquired 1,400 shares @$20 on july 1 | ||||||||||
Activity | Financing | ||||||||||
Accounts | Treasury Stock and Cash | ||||||||||
Statement(s) | Balance sheet | ||||||||||
Balance sheet | INCOME statement | ||||||||||
Assets | = | Liabilities | + | Equity | Revenues | - | Expenses | = | Net income | ||
-28000 | = | No entry | + | -28000 | No entry | No entry | No entry | ||||
1(b) | Reaquired 450 shares @$18 on August 1 | ||||||||||
Activity | Financing | ||||||||||
Accounts | Treasury Stock and Cash | ||||||||||
Statement(s) | Balance sheet | ||||||||||
Balance sheet | INCOME statement | ||||||||||
Assets | = | Liabilities | + | Equity | Revenues | - | Expenses | = | Net income | ||
-8100 | = | No entry | + | -8100 | No entry | No entry | No entry | ||||
2 | Journal entry for resold of treasury stock | ||||||||||
Debit | Credit | ||||||||||
Cash A/c | $51,800 | ||||||||||
Treasury stock | $36,100 | (8100+28000) | |||||||||
Paid in capital from Treasury stock | $15,700 | (Bal. fig.) | |||||||||
Balance sheet | INCOME statement | ||||||||||
Assets | = | Liabilities | + | Equity | Revenues | - | Expenses | = | Net income | ||
51800 | = | No entry | + | 51800 | No entry | No entry | No entry | ||||
Balance sheet presentation | |||||||||||
Common stock, $10 par, 10,000 shares issued and outstanding | $100,000 | ||||||||||
Additional paid in capital | $50,000 | ||||||||||
Retained earnings | $80,000 | ||||||||||
Paid in capital from Treasury stock | $51,000 | ||||||||||
Total Stockholders' equity | $281,000 |
Treasury Stock The Stockholders' Equity section of Preston Enterprises' balance sheet on January 1, 2017, appeared...
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