Problem 11-24A Analyzing journal entries for treasury stock transactions LO 11-4, 11-5
The following correctly prepared entries without explanations pertain to Corners Corporation:
| Account Title | Debit | Credit | |
| 1. | Cash | 1,800,000 | |
| Common Stock | 1,000,000 | ||
| Paid-in Capital in Excess of Par Value | 800,000 | ||
| 2. | Treasury Stock | 44,800 | |
| Cash | 44,800 | ||
| 3. | Cash | 38,000 | |
| Treasury Stock | 35,200 | ||
| Paid-in Capital in Excess of Cost of Treasury Stock | 2,800 | ||
The original sale (Entry 1) was for 400,000 shares, and the treasury stock was acquired for $8 per share (Entry 2).
PLEASE SHOW ALL WORK
c. How many shares were reissued in Entry 3? shares hares reissued d. How many shares are outstanding immediately following Entries 2 and 3, respectively? Outstanding Shares Entry 2 Entry 3
Homework Answers
a)
400,000 shares were issued for a total sum of $1,800,000
Hence, issue price of 1 share = 1,800,000/400,000
= $4.5
b)
Treasury shares were acquired for a total sum of $44,800 at $8 per share.
Hence, number of shares acquired = 44,800/8
= 5,600
c)
When treasury shares are re-issued, treasury stock is credited by the cost price paid to acquire the treasury shares.
Hence, number of shares re-issued in entry 3 = 35,200/8
= 4,400
d)
Outstanding shares after entry 2 = Number of shares issued - Number of shares acquired
= 400,000 - 5,600
= 394,400
Outstanding shares after entry 3 = Number of shares issued - Number of shares acquired + Number of shares re-issued
= 400,000 - 5,600 + 4,400
= 398,800
Kindly comment if you need further assistance. Thanks
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