Asked by Morgan Brunk on Jun 08, 2024
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A company has 10,000 shares of $10 par common stock outstanding. Prepare entries to record the following:
(a)Purchased 1,000 shares of treasury stock at $12. The treasury stock is accounted for by the cost method. There were no previous purchases of treasury shares.
(b)Sold 500 shares of treasury stock at $15.
(c)Purchased equipment for $75,000, paying $25,000 in cash and issuing 4,000 shares of common stock for the remaining.
(d)Sold 500 shares of treasury stock at $11.
Treasury Stock
Represents the shares that have been issued and subsequently reacquired by the corporation, not yet retired.
Par Common Stock
The face value of a share of stock as stated in the corporate charter.
Cost Method
An accounting method used to value inventory or investments at their original purchase cost.
- Analyze the impact of stock transactions, including stock issuance and treasury stock operations, on a company’s financial statements.
- Prepare and understand entries related to the reacquisition and sale of treasury stocks.
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KG
Learning Objectives
- Analyze the impact of stock transactions, including stock issuance and treasury stock operations, on a company’s financial statements.
- Prepare and understand entries related to the reacquisition and sale of treasury stocks.
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