Question

Lawn Spray Inc. develops and produces spraying equipment for lawn maintenance and industrial uses. On January 31 of the current year, Lawn Spray Inc. reacquired 18,000 shares of its common stock at $19 per share. On June 14, 13,500 of the reacquired shares were sold at $27 per share, and on November 23, 3,200 of the reacquired shares were sold at $20.

Required:

A.	Journalize the transactions of January 31, June 14, and November 23. Refer to the Chart of Accounts for exact wording of account titles.
B.	What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year?
C.	What is the balance in Treasury Stock on December 31 of the current year?
D.	How will the balance in Treasury Stock be reported on the balance sheet?

Answer 1

Answer
(A)
Date	Accounts title and Explanations	Debit ($)	Credit ($)
Jan.31	Treasury Stock (18000 shares * $19)	$ 342,000
	Cash		$342,000
Jun-14	Cash (13,500 * $27)	$ 364,500
	Treasury stock (13,500 * $19)		$256,500
	Paid-In Capital from Sale of Treasury Stock		$108,000
Nov. 23	Cash (3200 * $20)	$   64,000
	Treasury Stock  (3200 * $19)		$ 60,800
	Paid-In Capital from Sale of Treasury Stock		$    3,200
(B) Balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year-
$108000+$3200   = $ 111,200
(C) Balance in Treasury Stock on December 31 of the current year-
$342000-$ 256500-$ $ 60800
24700
(D) Treasury stock will be reported as the last item in the Stockholders' Equity section, as a deduction from the subtotal of items above it.

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