BUSINESS AND FINANCE

Exercise 13-8

Rinehart Corporation purchased from its stockholders 5,700 shares of its own previously issued stock for \$279,300. It later resold 1,900 shares for \$52 per share, then 1,900 more shares for \$47 per share, and finally 1,900 shares for \$41 per share.

Prepare journal entries for the purchase of the treasury stock and the three sales of treasury stock. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

To record purchase from stockholders

 Account titles and explanation Debt Credit Treasury Stock 279,300 Cash 279,300

To record sales of shares at \$52 per share

 Account titles and explanation Debt Credit Cash 98,800 Treasury Stock 93,100 Paid-in Capital from Treasury Stock 5,700

Cash = 1,900 x 52 = 98,800

Treasury Stock = 1,900 x 49 = 93,100

To record sales of shares at \$47 per share

 Account titles and explanation Debt Credit Cash 89,300 Paid-in Capital from Treasury Stock 3,800 Treasury Stock 93,100

Cash = 1,900 x \$47= 89,300

Treasury Stock = 1,900 x 49 = 93,100

To record sales of shares at \$41 per share

 Account titles and explanation Debt Credit Retained Earnings 13,300 Paid-in Capital from Treasury Stock 1,900 Cash 77,900 Treasury Stock 93,100

Cash = 1,900 x \$41=77,900

Paid-in Capital from Treasury Stock = 5,700 – \$3,800 = 1,900

Treasury Stock = 1,900 x 49 = 93,100

Problem 13-2A

Fechter Corporation had the following stockholders’ equity accounts on January 1, 2014: Common Stock (\$4 par) \$405,680, Paid-in Capital in Excess of Par Common Stock \$178,180, and Retained Earnings \$101,940. In 2014, the company had the following treasury stock transactions.

Mar. 1 Purchased 6,570 shares at \$9 per share

June 1 Sold 1,480 shares at \$13 per share.

Sept. 1 Sold 1,590 shares at \$11 per share.

Dec. 1 Sold 1,240 shares at \$6 per share.

Fechter Corporation uses the cost method of accounting for treasury stock. In 2014, the company reported net income of \$29,080.

A) Journalize the treasury stock transactions, and prepare the closing entry at December 31, 2014, for net income. (Credit account titles are automatically indented when amount is entered. Do not indent manually.

Mar. 1

 Account titles and explanation Debt Credit Treasury Stock 59130 Cash 59130

Treasury Stock = 6,570 x 9 = 59130

June 1

 Account titles and explanation Debt Credit Cash 19,240 Treasury Stock 13,320 Paid-in Capital from Treasury Stock 5920

Cash = 1,480 x 13= 19,240

Treasury Stock = 1,480 x 9 = 13,320

Paid-in Capital from Treasury Stock = 1,480 x 4(13-9) = 5920

Sept. 1

 Account titles and explanation Debt Credit Cash 17,490 Treasury Stock 14,310 Paid-in Capital from Treasury Stock 3,180

Cash = 1,590 x 11 = 17,490

Treasury Stock = 1,590 x 9 = 14,310

Paid-in Capital from Treasury Stock = 1,590 x 2(11-9) = 3,180

Dec. 1

 Account titles and explanation Debt Credit Cash 7,440 Paid-in Capital from Treasury Stock 3720 Treasury Stock 11,160

Cash = 1,240 x 6 = 7,440

Paid-in Capital from Treasury Stock = 1,240 x 3 (9-6) = 3,720

Treasury Stock = 1,240 x 9 = 11,160

Dec. 31

 Account titles and explanation Debt Credit Income Summary 29,080 Retained Earnings 29,080

B) Open accounts for Paid-in Capital from Treasury Stock, Treasury Stock, and Retained Earnings. Post to these accounts using J10 as the posting reference. (Post entries in the order of journal entries presented in the previous part.)

Order now and get 10% discount on all orders above \$50 now!!The professional are ready and willing handle your assignment.

ORDER NOW »»