Question

Problem 13-02A a Fechter Corporation had the following stockholders' equity accounts on January 1, 2020: Common Stock ($5 par) $500,000, Paid-in Capital in Excess of Par-Common Stock $200,000, and Retained Earnings $100,000. In 2020, the company had the following treasury stock transactions. Mar. 1 Purchased 5,000 shares at $8 per share. une 1 Sold 1,000 shares at $12 per share. Sept.1 Sold 2,000 shares at $10 per share. Dec. 1 Sold 1,000 shares at $7 per share. Fechter Corporation uses the cost method of accounting for treasury stock. In 2020, the company reported net income of $30,000. Your answer is partially correct. Try again. Dournalize the treasury stock transactions, and prepare the closing entry at December 31. 2020, for net income. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manualy Date Account Titles and Explanation DebitCredit Mar. 1 Treasury Stock Cash June 1 cash Treasury Stock

How can I get the IS and RE?

Answer 1

Solution:

Net Income given in question = $30,000

Therefore Income summary and Retained earnings to close net income = $30,000

Fechter Corporation
Journal Entries
S.No	Particulars	Debit	Credit
1-mach	Treasury Stock Dr	$40,000
	To Cash		$40,000
	(To record Purchase of Treasury Stock)
01-Jun	Cash Dr (1000*$12)	$12,000
	To Treasury Stock [1000*$8)		$8,000
	To Paid in capital from Treasury Stock		$4,000
	(To record sale of 1000 treasury stock)
01-Sep	Cash Dr (2000*$10)	$20,000
	To Treasury Stock [2000*$8)		$16,000
	To Paid in capital from Treasury Stock		$4,000
	(To record sale of 2000 treasury stock)
01-Dec	Cash Dr (1000*$7)	$7,000
	Paid in capital from Treasury Stock	$1,000
	To Treasury Stock [1000*$8)		$8,000
	(To record sale of 1000 treasury stock)
31-Dec	Income Summary Dr	$30,000
	To Retained Earnings		$30,000
	(To close net Income)