Question

Exercise 181 a-b (Part Level Submission) An inexperienced accountant for Chetola Corporation made the following entries. July 1 Cash 240,000 Common Stock Issued 15,000 shares of no-par common stock, stated value $10 per share) Common Stock Retained Earnings 240,000 Sept. 1 32,000 4,000 Cash 36,000 Purchased 2,000 shares issued on July 1 for the treasury at $18 per share) Dec. 1 Cash 20,000 Common Stock 16,000 Gain on of Stock 4,000 Sold 1,000 shares of the treasury stock at $20 per share)

Answer 1

Solution:

Journal Entries - Chetola Corporation
Date	Particulars	Debit	Credit
1-Jul	Cash Dr	$240,000.00
	To Common Stock		$150,000.00
	To Paid in capital in excess of stated value - Common Stock		$90,000.00
	(To record issue of common stock)
1-Sep	Treasury stock Dr	$36,000.00
	To Cash		$36,000.00
	(To record purchase of own stock)
1-Dec	Cash Dr	$20,000.00
	To Treasury stock		$18,000.00
	To Paid in capital from Treasury stock		$2,000.00
	(To record sale of treasury stock)