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 19,600 shares of its common stock at $19 per share. On June 14, 13,700 of the reacquired shares were sold at $25 per share, and on November 23, 4,700 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?

. Journalize the transactions of January 31, June 14, and November 23. Refer to the Chart of Accounts for exact wording of account titles.

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JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
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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

(a)
Date	Accounting titles and Explanations	Debit	Credit
January 31	Treasury stock (19,600 shares x $ 19 )	$ 372,400
	Cash		$ 372,400
	(To record the purchase of Treasury stock )
June 14	Cash (13,700 shares x $ 25 )	$ 342,500
	Treasury stock              (13,700 shares x $ 19 )		$ 260,300
	Paid in capital from Sale of Treasury stock - Bal. Fig.		$ 82,200
	(To record the Sale of Treasury stock )
November 23	Cash (4,700 shares x $ 20 )	$ 94,000
	Treasury stock              (4,700 shares x $ 19 )		$ 89,300
	Paid in capital from Sale of Treasury stock - Bal. Fig.		$ 4,700
	(To record the Sale of Treasury stock )
b)	Balance in Paid-In Capital from Sale of Treasury Stock on December 31   = $ 82,200 + $ 4,700		$ 86,900	Credit
c)	Balance in Treasury Stock on December 31             = $ 372,400 (-) $ 260,300 (-) $ 89,300		$ 22,800	Debit
d)	Balance in Treasury Stock be reported on the balance sheet as a amount will be decuted from Total paid in capital and Retained earnings