Recording Treasury StockTransaction sand Analyzing TheirImpact
During 2011 the following selected transactions affecting stockholders’ equity occurred for TARP Corporation:
a | Feb. 1 | Purchased in the market 160 shares of the company’s own common stock at $20 per share. |
b. | Jul. 15 | Sold 80 of the shares purchased on February 1for $21 cash per share. |
c | Sept. 1 | Sold 50 more of the shares purchased on February 1 for $19 cash per share. |
Required:
1. Give the indicated journal entries for each of the transactions.
2. What impact does the purchase of treasury stock have on dividends paid?
3. What imp act does the sale of treasury stock for an amount higher than the purchase price have on net income and the statement of cash flows?
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