Homework Answers
Ans.:
General Journal in books of Kelly Company
(1) Calculation of Loss on reacquisition of Stock @$40-
Amount to be paid-3000 Shares @$40=$120000
Less: Per value of 3000 stock @$10=$30000
Loss on reacquisition of 3000 stock= $90000. This will be charged to Retained Earning Account.
Post
| Date | Account/Description | REF. | Debit | Credit |
| Treasury Stock | $30000 | |||
| Retained Earning | $90000 | |||
| Cash/Bank | $120000 |
(2) Re-issuance of 1200 shares @$50, per share:Here is excess of reissue price $40 per share over cost of $10 per share represents additional paid-in capital and will be credited to Paid-In Capital-Treasury Stock.
POST
| Date | Account/Description | REF. | Debit | Credit |
| Cash/Bank (1200 shares x $50) | $60000 | |||
| Treasury Stock (1200 shares x $10) | $12000 | |||
| Paid-in Capital (1200 shares x $40) | $48000 |
(3) Re-issuance of 800 shares @$28, per share:Here is excess of reissue price $28 per share over cost of $10 per share represents additional paid-in capital and will be credited to Paid-In Capital-Treasury Stock.
POST
| Date | Account/Description | REF. | Debit | Credit |
| Cash/Bank (800 shares x $28) | $22400 | |||
| Treasury Stock (800 shares x $10) | $8000 | |||
| Paid-in Capital (800 shares x $18) | $14400 |
(4) Re-issuance of remaining shares 1000 shares (3000-1200-800) @$35 per share:Here is excess of reissue price $35 per share over cost of $10 per share represents additional paid-in capital and will be credited to Paid-In Capital-Treasury Stock.
POST
| Date | Account/Description | REF. | Debit | Credit |
| Cash/Bank (1000 shares x $35) | $35000 | |||
| Treasury Stock (1000 shares x $10) | $10000 | |||
| Paid-in Capital (1000 shares x $25) | $25000 |
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