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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Accounting for Shares

Kress Products’ corporate charter authorized the firm to sell 800,000 shares of $10 par common stock. At the beginning of 2019, Kress sold 318,000 shares and reacquired 4,500 of those shares. The reacquired shares were held as treasury stock. During 2019, Kress sold an additional 24,350 shares and purchased 8,200 more treasury shares.

Required:

Determine the number of issued and outstanding shares at December 31, 2019.

To determine

Concept introduction:

Treasury stock:

Treasury stock is the shares bought back by the company itself. A company may purchase its own shares and the shares bought back are called treasury stock. The journal entries are made at the time of sale and purchase of treasury stock as follows:

  • For Purchase of treasury stock:

    Treasury stock account is debited and cash account is credited with the cost of treasury stock purchased.

  • For Sale / Reissuance of treasury stock:

    Cash account is debited for the amount received on sale of treasury stock and the Treasury stock account is credited with the cost of treasury stock. For the difference in cost and sale value, Additional Paid in Capital and Retained earnings accounts are adjusted.

To calculate:

The number of shares issued and outstanding at Dec. 31, 2019.

Explanation

The numbers of shares issued and outstanding at Dec. 31, 2019 are calculated as follows:

Number of shares ...

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