Question

Buffalo Company has the following stockholders' equity accounts at December 31, 2020. Common Stock ($100 par value, authorized 8,300 shares) $490,300 Retained Earnings 303,000 Prepare entries in journal form to record the following transactions, which took place during 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) (1) 260 shares of outstanding stock were purchased at $98 per share. (These are to be accounted for using the cost method.) (2) A $21 per share cash dividend was declared. (3) The dividend declared in (2) above was paid. (4) The treasury shares purchased in (1) above were resold at $103 per share. (5) 460 shares of outstanding stock were purchased at $105 per share. (6) 380 of the shares purchased in (5) above were resold at $97 per share.

Answer 1

Buffalo Company Journal Enteries Trans. Particulars i Treasury shares a/c Dr. To Cash (Treasury shares purchased) 260 x 98 Debit in $ Credit in $ 25480 25480 2 Dr. 97503 97503 Cash Dividend a/c To Dividend Payable (Dividend declared) 4903 - 260 = 4643 x 21 Dr. 97503 Dividend Payable a/c To Cash (Dividend paid) 97503 4 Cash a/c Dr. 26780 To Treasury Shares To Paid in Capital - Treasury (Treasury shares sold) 260 x 103 = 26780 25480 1300 5 48300 48300 Treasury shares a/c Dr. To Cash (Treasury shares purchased) 460 x 105 36860 1300 1740 Cash a/c Dr. Paid in Capital - Treasury a/c Dr. Retained Earnings a/c Dr. To Treasury Shares (Treasury shares sold) 380 x 97 = 36860; 380 x 105 = 39900 39900

Stockholders Equity As at 31.12.2020 Common Stock, $100 par value, authorized 8,300 shares; issued 4,903 shares,4,823 shares outstanding: Retained Earnings 490300 387960 878260 -8400 869860 Less:Treasury Stock (80 shares) Total Stockholders' Equity Retained Earnings Treasury shares 1740 Bal Income summary Bal. 387960 389700 303000 86700 389700