Question

5. Discount Fumiture, Inc. completed the following treasury stock transactions in 2018: (Click the icon to view the transactions.) Requirements 1. Journalize these transactions. Explanations are not required. 2. How will Discount Furniture, Inc. report treasury stock on its balance sheet as of December 31, 2018? Requirement 1. Journalize these transactions. (Record debits first, then credits. Exclude explanations from any journal entries.) Dec. 1: Purchased 1,900 shares of the company's $1 par value common stock as treasury stock, paying cash of $5 per share. Date Accounts Debit Credit Dec. 1 Dec. 15: Sold 200 shares of the treasury stock for cash of $8 per sharo. Date Accounts Debit Credit Dec. 15 (6) Dec. 20: Sold 1,000 shares of the treasury stock for cash of $1 per share. (Assume the balance in Paid-In Capital from Treasury Stock Transactions on December 20 is $2,400.) Date Accounts Debit Credit Dec. 20 (19) (11) (12) Requirement 2. How will Discount Furniture, Inc. report treasury stock on its balance sheet as of December 31, 2018? Discount Furniture, Inc. will report treasury stock (13) - on the balance sheet as (14) – — to total stockholders' equity.

Answer 1

Requirement 1:

Date	Account title and Explanation	Debit	Credit
Dec.1	Treasury stock [1,900 x $5 cost]	$9,500
	Cash		$9,500
	[To record purchase of own shares]
Dec.15	Cash [200 x $8]	$1,600
	Treasury stock [200 x $5 cost]		$1,000
	Paid-in capital from treasury stock Transactions		$600
	[To record sale of treasury stock above the cost]
Dec.20	Cash [1,000 x $1]	$1,000
	Paid-in capital from treasury stock Transactions	$2,400
	Retained earnings	$1,600
	Treasury stock [1,000 x $5 cost]		$5,000
	[To record sale of treasury stock below the cost]

Requirement 2:

Discount Furniture, Inc. will report treasury stock beneath retained earnings on the balance sheet as a reduction to total stockholders' equity.