Analyzing Treasury Stock Transactions
RadioShack Corporation primarily engages in the retail sale of consumer electronics goods and services through 4,467 company-operated stores under the RadioShack brand, located throughout the United States, as well as in Puerto Rico and the U.S. Virgin Islands. These stores are located in major shopping malls and strip centers, as well as individual storefronts. The company’s statement of cash flows contained the following information (in million):
| 2006 | 2005 | 2004 |
Cash flows from financing activities: |
|
|
|
Purchases of treasury stock | — | (625.8) | (251.1) |
Sale of treasury stock | 10.5 | 30.1 | 35.4 |
Required:
1. Record the purchase of treasury stock in 2005.
2. Record the sale of treasury stock in 2006. Assume the stock had been purchased at a cost of $9 million.
3. Would RadioShack have reported a loss if the stock sold in 2006 had been purchased originally for $13 million?
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