BUSINESS AND FINANCE

Exercise 13-7 (Part level Submission

 

On January 1, 2014, the stockholders’ equity section of Newlin Corporation shows common stock ($5 par value) $1,500,000; paid-in capital in excess of par $1,000,000; and retained earnings $1,200,000. During the year, the following treasury stock transactions occurred.

Mar. 1 Purchased 50,000 shares for cash at $15 per share.

July. 1 Sold 10,000 treasury shares for cash at $17 per share.

Sept.1 Sold 8,000 treasury shares for cash at $14 per share.

 

a) Journalize the treasury stock transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

 

Mar. 1

Account titles and explanation Debt Credit
Treasury Stock 750,000  
Cash   750,000

Treasury Stock = 50,000 ×15 =750,000

 

 

 

July. 1

Account titles and explanation Debt Credit
Cash 170,000  
Treasury Stock   150,000
Paid-in Capital from Treasury Stock   20,000

 

Cash = 10,000 × 17 = 170,000

Treasury Stock =10,000 × 15 = 150,000

Paid-in Capital from Treasury Stock =10,000 × 2 = 20,000

 

 

 

 

 

 

Sept.1

Account titles and explanation Debt Credit
Cash 112,000  
Paid-in Capital from Treasury Stock 8,000  
Treasury Stock   120,000

 

Cash = 8,000 × 14 =112,000

Treasury Stock =8,000 × 15= 120,000

Paid-in Capital from Treasury Stock =8,000 × 1= 8,000

 

 

b) Restate the entry for September 1, assuming the treasury shares were sold at $12 per share. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Sept.1

Account titles and explanation Debt Credit
Cash 96000  
Paid-in Capital from Treasury Stock 20,000  
Retained Earnings 4,000  
Treasury Stock   120000

 

Cash  = 8,000 × 12 =96000

Treasury Stock =8,000 × 15= 120,000

 

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