National Supply’s shareholders’ equity included the following accounts at December 31, 2020: Shareholders' Equity Common stock,...

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National Supply’s shareholders’ equity included the following accounts at December 31, 2020: Shareholders' Equity Common stock,...

National Supply’s shareholders’ equity included the following accounts at December 31, 2020:

Shareholders' Equity
Common stock, 9 million shares at $1 par	$	9,000,000
Paid-in capital—excess of par		81,000,000
Retained earnings		80,500,000

Required:
1. National Supply reacquired shares of its common stock in two separate transactions and later sold shares. Prepare the entries for each of the transactions under each of two separate assumptions: the shares are (a) retired and (b) accounted for as treasury stock.


February 15, 2021	Reacquired 240,000 shares at $12 per share.
February 17, 2022	Reacquired 240,000 shares at $9.50 per share.
November 9, 2023	Sold 155,000 shares at $11 per share (assume FIFO cost).

Journal entry (requirements):

1. Record the purchase of 240,000 shares at $12 per share on February 15, 2021 that are accounted for as treasury stock.

2. Record the purchase of 240,000 shares at $9.50 per share on February 17, 2022 that are accounted for as treasury stock.

3. Record the sale of 155,000 shares at $11 per share (assume FIFO cost) on November 9, 2023.

business accounting

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Answer 1

Answer #1

Solution:

	Journal Entries
	Sr. No.	Date	Account Title and explanation	Debit	Credit

	1	Feb 15. 2021	Treasurry stock (240,000 Shares X $ 12)	$28,80,000
			Cash		$28,80,000
			(To Record the purchase of treasurry Stock)


	2	Feb 17. 2022	Treasurry stock (240,000 Shares X $9.50)	$22,80,000
			Cash		$22,80,000
			(To Record the purchase of treasurry Stock)


	3	Nov 09. 2023	Cash (155,000 Shares X $ 11)	$17,05,000
			Retained Earnings (155,000 Shares X $ 1)	$1,55,000
			Treasurry Stock (155,000 Shares X 12)		$18,60,000
			(To record the resold of treasury stock)

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Answer 2

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