Question

Biscayne Bay Water Inc. bottles and distributes spring water. On May 14 of the current year, Biscayne Bay Water Inc. reacquired 2,200 shares of its common stock at $61 per share. On September 6, Biscayne Bay Water Inc. sold 1,700 of the reacquired shares at $64 per share. The remaining 500 shares were sold at $57 per share on November 30.

a. Journalize the transactions of May 14, September 6, and November 30. For a compound transaction, if an amount box does not require an entry, leave it blank.

May 14
Sept. 6
Nov. 30

b. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year?
$  

c. Where will the balance in Paid-In Capital from Sale of Treasury Stock be reported on the balance sheet?

d. For what reasons might Biscayne Bay Water Inc. have purchased the treasury stock?

Answer 1

a
May 14	Treasury Stock	134200		=2200*61
	Cash		134200
Sept 6	Cash	108800		=1700*64
	Treasury Stock		103700	=1700*61
	Paid in Capital from sale of Treasury Stock		5100
Nov 30	Cash	28500		=500*57
	Paid in Capital from sale of Treasury Stock	2000
	Treasury Stock		30500	=500*61
b
	Paid-In Capital from Sale of Treasury Stock	3100	Credit	=5100-2000
c
	It will be reported in Stockholder's Equity section
d
	Reasons for purchase of Treasury Stock:
	For reissuance to employees as a bonus according to stock purchase agreements
	To support the market price of the stock
	To provide shares for resale to employees