Financial & Managerial Accounting
14th Edition
ISBN: 9781337515498
Author: WARREN
Publisher: Cengage
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Chapter 12, Problem 12.16EX
A.
To determine
To prepare: The
B.
To determine
The balance in paid in capital from sale of treasury stock on December 31 of the current year.
C.
To determine
To discuss: The reason, for which Incorporation B has purchased the treasury stock.
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Treasury Stock Transactions
Biscayne Bay Water Inc. bottles and distributes spring water. On May 14 of the current year, Biscayne Bay Water Inc. reacquired 2,300 shares of its common stock at $52
per share. On September 6, Biscayne Bay Water Inc. sold 1,800 of the reacquired shares at $55 per share. The remaining 500 shares were sold at $49 per share on
November 30.
a. Journalize the transactions of May 14, September 6, and November 30. If an amount box does not require an entry, leave it blank.
May 14
Sept. 6
Nov. 30
36
b. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year?
$
c. Where will the balance in Paid-In Capital from Sale of Treasury Stock be reported on the balance sheet?
d. For what reasons might Biscayne Bay Water Inc. have purchased the treasury stock?
Treasury Stock Transactions
Mystic Lake Inc. bottles and distributes spring water. On July 9 of the current year,
Mystic Lake reacquired 3,800 shares of its common stock at $91 per share. On
September 22, Mystic Lake sold 2,700 of the reacquired shares at $101 per share. The
remaining 1,100 shares were sold at $86 per share on November 23.
a. Journalize the transactions of July 9, September 22, and November 23. If an
amount box does not require an entry, leave it blank.
July 9
Sept. 22
UD
b. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31
of the current year?
Nov. 23
c. For what reasons might Mystic Lake Inc. have purchased the treasury stock?
Treasury Stock Transactions
Mystic Lake Inc. bottles and distributes spring water. On July 9 of the current year, Mystic Lake reacquired 4,900 shares of its common stock at
$75 per share. On September 22, Mystic Lake sold 3,400 of the reacquired shares at $84 per share. The remaining 1,500 shares were sold at
$71 per share on November 23.
a. Journalize the transactions of July 9, September 22, and November 23. If an amount box does not require an entry, leave it blank.
July 9 Treasury Stock
Cash
✓
168,000 X
Sept. 22 Cash
✓
Treasury Stock
✓ ✓
Paid-In Capital from Sale of Treasury Stock
Nov. 23 Cash
Paid-In Capital from Sale of Treasury Stock
Feedback
Treasury
Stock
Stock
✓
196,500 X
0 ✓
285,600 ✔
0 ✓
0
106,500
0
✓
1,500 X
> x
c. For what reasons might Mystic Lake Inc. have purchased the treasury stock?
All of these reasons.
0
0 ✓
252,000 X
10,200 X
0
0
106,500 X
Check My Work
The repurchase of shares, known as treasury stock, is typically recorded using the cost method. When the…
Chapter 12 Solutions
Financial & Managerial Accounting
Ch. 12 - Of two corporations organized at approximately the...Ch. 12 - A stockbroker advises a client to buy preferred...Ch. 12 - A corporation with both preferred stock and common...Ch. 12 - An owner of 2,500 shares of Simmons Company common...Ch. 12 - Prob. 5DQCh. 12 - Prob. 6DQCh. 12 - A corporation reacquires 60,000 shares of its own...Ch. 12 - The treasury stock in Discussion Question 7 is...Ch. 12 - What are the three classifications of restrictions...Ch. 12 - Prob. 10DQ
Ch. 12 - Dividends per share Zero Calories Company has...Ch. 12 - Entries for issuing stock On January 22, Zentric...Ch. 12 - Entries for cash dividends The declaration,...Ch. 12 - Entries for stock dividends Alpine Energy...Ch. 12 - Entries for treasury stock On May 27, Hydro...Ch. 12 - Reporting stockholders equity Using the following...Ch. 12 - Retained earnings statement Noric Cruises Inc....Ch. 12 - Dividends per share Seventy-Two Inc., a developer...Ch. 12 - Dividends per share Lightfoot Inc., a software...Ch. 12 - Entries for issuing par stock On January 22,...Ch. 12 - Entries for issuing no-par stock On May 15, Helena...Ch. 12 - Issuing stock for assets other than cash On...Ch. 12 - Selected stock transactions Alpha Sounds Corp., an...Ch. 12 - Issuing stock Willow Creek Nursery, with an...Ch. 12 - Prob. 12.8EXCh. 12 - Entries for cash dividends The declaration,...Ch. 12 - Prob. 12.10EXCh. 12 - Prob. 12.11EXCh. 12 - Effect of cash dividend and stock split Indicate...Ch. 12 - Selected dividend transactions, stock split...Ch. 12 - Treasury stock transactions Mystic Lake Inc....Ch. 12 - Prob. 12.15EXCh. 12 - Prob. 12.16EXCh. 12 - Reporting paid-in capital The following accounts...Ch. 12 - Stockholders Equity section of balance sheet The...Ch. 12 - Stockholders Equity section of balance sheet...Ch. 12 - Retained earnings statement Sumter Pumps...Ch. 12 - Prob. 12.21EXCh. 12 - Prob. 12.22EXCh. 12 - Dividends on preferred and common stock Pecan...Ch. 12 - Stock transactions for corporate expansion On...Ch. 12 - Selected stock transactions The following selected...Ch. 12 - Entries for selected corporate transactions Morrow...Ch. 12 - Entries for selected corporate transactions...Ch. 12 - Dividends on preferred and common stock Yosemite...Ch. 12 - Stock transaction for corporate expansion Pulsar...Ch. 12 - Selected stock transactions Diamondback Welding ...Ch. 12 - Entries for selected corporate transactions Nav-Go...Ch. 12 - Prob. 12.5BPRCh. 12 - Selected transactions completed by Equinox...Ch. 12 - Prob. 1ADMCh. 12 - Pacific Gas and Electric: Earnings per share...Ch. 12 - Caterpillar: Earnings per share Caterpillar Inc....Ch. 12 - BBT and Regions Financial: Earnings per share BBT...Ch. 12 - Ethics In Action Tommy Gunn is a division manager...Ch. 12 - Prob. 12.3TIF
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- Stockholders' Equity section of balance sheet The following accounts and their balances appear in the ledger of Goodale Properties Inc. on June 30 of the current year: Prepare the Stockholders Equity section of the balance sheet as of June 30. Eighty thousand shares of common stock are authorized, and 9,000 shares have been reacquired.arrow_forwardSelected stock transactions The following selected accounts appear in the ledger of Parks Construction Inc. at the beginning of the current year: During the year, the corporation completed a number of transactions affecting the stockholders equity. They are summarized as follows: a. Issued 200,000 shares of common stock at 12, receiving cash. b. Issued 8,000 shares of preferred 2% stock at 115. c. Purchased 175,000 shares of treasury common for 10 per share. d. Sold 110,000 shares of treasury common for 14 per share. e. Sold 30,000 shares of treasury common for 8 per share. f. Declared cash dividends of 1.25 per share on preferred stock and 0.08 per share on common stock. g. Paid the cash dividends. Instructions Journalize the entries to record the transactions. Identify each entry by letter.arrow_forwardNutritious Pet Food Companys board of directors declares a cash dividend of $1.00 per common share on November 12. On this date, the company has issued 12,000 shares but 2,000 shares are held as treasury shares. What is the journal entry to record the declaration of this dividend?arrow_forward
- Nutritious Pet Food Companys board of directors declares a cash dividend of $1.00 per common share on November 12. On this date, the company has issued 12,000 shares but 2,000 shares are held as treasury shares. The company pays the dividend on December 14. What is the journal entry to record the payment of the dividend?arrow_forwardStockholders equity accounts and other related accounts of Gonzales Company as of January 1, 20--, the beginning of its fiscal year, are shown below. (a)Received 20,000 for the balance due on subscriptions for preferred stock with a par value of 40,000 and issued the stock. (b)Purchased 10,000 shares of common treasury stock for 18 per share. (c)Received subscriptions for 10,000 shares of common stock at 19 per share, collecting down payments of 45,000. (d)Issued 15,000 shares of common stock in exchange for land with a fair market value of 290,000. (e)Sold 5,000 shares of common treasury stock for Si00,000. (f)Issued 10,000 shares of preferred stock at 11.50 per share, receiving cash. (g)Sold 3,000 shares of common treasury stock for 17 per share. REQUIRED 1. Prepare general journal entries for the transactions, identifying each transaction by letter. 2. Post the journal entries to appropriate T accounts. The cash account has a beginning balance of 300,000. 3. Prepare the stockholders equity section of the balance sheet as of December 31, 20--. Net income for the year was 825,000 and dividends of 400,000 were paid.arrow_forwardTreasury Stock Transactions Mystic Lake Inc. bottles and distributes spring water. On July 9 of the current year, Mystic Lake reacquired 4,900 shares of its common stock at $75 per share. On September 22, Mystic Lake sold 3,400 of the reacquired shares at $84 per share. The remaining 1,500 shares were sold at $71 per share on November 23. a. Journalize the transactions of July 9, September 22, and November 23. If an amount box does not require an entry, leave it blank. July 9 Treasury Stock ✓ Cash Sept. 22 Cash Nov. 23 Treasury Stock ✓ Paid-In Capital from Sale of Treasury Stock Feedback Cash Paid-In Capital from Sale of Treasury Stock ✓ Treasury Stock 367,500 0 285,600 0 0 106,500 6,000 0 ✓ 0 367,500 c. For what reasons might Mystic Lake Inc. have purchased the treasury stock? All of these reasons. ✓ 0 228,000 X 57,600 X 0 0 112,500 Check My Work The repurchase of shares, known as treasury stock, is typically recorded using the cost method. When the treasury stock is resold, what is…arrow_forward
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