(a) Explanation Record the repurchase of23,500shares of own stock at $75 per share. Date Account Titles and Explanation Debit ($) Credit ($) May 14 Treasury Stock ( 23,500 shares × $75 per share ) 1,762,500 Cash 1,762,500 (To record purchase of treasury stock) Table (1) Description: Treasury stock is contra- stockholders’ equity account with a normal debit balance. Thus, when treasury stocks are purchased, it decreases the stockholders’ equity account. In this case, it reduces the stockholders’ equity by $1,762,500. Therefore, treasury stock account is debited with $1,762,500. Cash is an asset. It is decreased as cash is paid for the purchase of treasury stock. Therefore, the cash account is credited with $1,762,500. Record the sale of 14,000 shares of treasury stock for cash at $81 per share. Date Account Titles and Explanation Debit ($) Credit ($) September 6 Cash ( 14,000 shares × $81 per share ) 1,134,000 Treasury stock ( 14,000 shares × $75 per share ) 1,050,000 Paid-in capital from sale of treasury stock ( $ 1 , 134 , 000 − $ 1 , 050 , 000 ) 84,000 (To record sale of treasury stock for above the cost price) Table (2) Description: Cash is an asset B. To determine The balance in paid in capital from sale of treasury stock on December 31 of the current year. c. To determine The location where the balance in paid in capital from sale of treasury stock be reported on the balance sheet. d. To determine To discuss: The reason, for which Incorporation B has purchased the treasury stock.

Bundle: Accounting, Loose-Leaf Version, 26th + CengageNOWv2, 2 term Printed Access Card

26th Edition

ISBN: 9781305617063

Author: Carl Warren, Jim Reeve, Jonathan Duchac

Publisher: Cengage Learning

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Question

Chapter 13, Problem 13.13EX

(a)

To determine

Treasury Stock: It refers to the shares that are reacquired by the corporation that are already issued to the stockholders, but reacquisition does not signify retirement.

To prepare: The journal entries for the purchase and sales of treasury stock.

To determine

The balance in paid in capital from sale of treasury stock on December 31 of the current year.

To determine

The location where the balance in paid in capital from sale of treasury stock be reported on the balance sheet.

To determine

To discuss: The reason, for which Incorporation B has purchased the treasury stock.

Expert Solution & Answer

Chapter 13 Solutions

Bundle: Accounting, Loose-Leaf Version, 26th + CengageNOWv2, 2 term Printed Access Card

Ch. 13 - Of two corporations organized at approximately the...Ch. 13 - Prob. 2DQ Ch. 13 - A corporation with both preferred stock and common...Ch. 13 - An owner of 2,500 shares of Simmons Company common...Ch. 13 - Prob. 5DQ Ch. 13 - Prob. 6DQ Ch. 13 - The treasury stock in Discussion Question 7 is...Ch. 13 - What are the three classifications of restrictions...Ch. 13 - Indicate how prior period adjustments should he...Ch. 13 - What is the primary purpose of a stock split?

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Treasury Stock : It refers to the shares that are reacquired by the corporation that are already issued to the stockholders, but reacquisition does not signify retirement. To prepare: The journal entries for the purchase and sales of treasury stock.

Solution Summary: The author explains that Treasury Stock refers to the shares that are reacquired by the corporation, but reacquisition does not signify retirement.

Concept explainers

Treasury Stock: It refers to the shares that are reacquired by the corporation that are already issued to the stockholders, but reacquisition does not signify retirement.

To prepare: The journal entries for the purchase and sales of treasury stock.

The balance in paid in capital from sale of treasury stock on December 31 of the current year.

The location where the balance in paid in capital from sale of treasury stock be reported on the balance sheet.

To discuss: The reason, for which Incorporation B has purchased the treasury stock.

Chapter 13 Solutions

Treasury Stock : It refers to the shares that are reacquired by the corporation that are already issued to the stockholders, but reacquisition does not signify retirement. To prepare: The journal entries for the purchase and sales of treasury stock.

Solution Summary: The author explains that Treasury Stock refers to the shares that are reacquired by the corporation, but reacquisition does not signify retirement.

Concept explainers

Treasury Stock: It refers to the shares that are reacquired by the corporation that are already issued to the stockholders, but reacquisition does not signify retirement. To prepare: The journal entries for the purchase and sales of treasury stock.

The balance in paid in capital from sale of treasury stock on December 31 of the current year.

The location where the balance in paid in capital from sale of treasury stock be reported on the balance sheet.

To discuss: The reason, for which Incorporation B has purchased the treasury stock.

Chapter 13 Solutions

Treasury Stock: It refers to the shares that are reacquired by the corporation that are already issued to the stockholders, but reacquisition does not signify retirement.

To prepare: The journal entries for the purchase and sales of treasury stock.