menu
bartleby
search
close search
Hit Return to see all results
close solutoin list

Treasury stock transactions Lava Lake Inc. bottles and distributes spring water. On February 11 of the current year, Lava Lake reacquired 180,000 shares of its common stock at $17 per share. On April 30, Lava Lake Inc. sold 90,000 of the reacquired shares at $20 per share. On August 22, Lava Lake Inc. sold 30,000 shares at $15 per share. a. Journalize the transactions of February 11, April 30, and August 22. b. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year? c. For what reasons might Lava Lake have purchased the treasury stock?

BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

Solutions

Chapter
Section
BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
Chapter 13, Problem 14E
Textbook Problem
1 views

Treasury stock transactions

Lava Lake Inc. bottles and distributes spring water. On February 11 of the current year, Lava Lake reacquired 180,000 shares of its common stock at $17 per share. On April 30, Lava Lake Inc. sold 90,000 of the reacquired shares at $20 per share. On August 22, Lava Lake Inc. sold 30,000 shares at $15 per share.

  1. a. Journalize the transactions of February 11, April 30, and August 22.
  2. b. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year?
  3. c. Chapter 13, Problem 14E, Treasury stock transactions Lava Lake Inc. bottles and distributes spring water. On February 11 of For what reasons might Lava Lake have purchased the treasury stock?

a.

To determine

Journalize the transactions of February 11, April 30, and August 22.

Explanation of Solution

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.

Record the repurchase of180,000shares of own stock at $17 per share.

DateAccount Titles and ExplanationDebit ($)Credit ($)
February11Treasury Stock (180,000 shares × $17 per share)3,060,000
       Cash3,060,000
(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 $3,060,000. Therefore, treasury stock account is debited with $3,060,000.
  • Cash is an asset. It is decreased as cash is paid for the purchase of treasury stock. Therefore, the cash account is credited with $3,060,000.

Record the sale of 90,000 shares of treasury stock for cash at $20 per share.

DateAccount Titles and ExplanationDebit ($)Credit ($)
April 30Cash (90,000 shares × $20 per share)1,800,000
 

     Treasury stock

(90,000 shares × $17 per share)

 1,530,000
 

     Paid-in capital from sale of treasury stock

($1,800,000$1,530,000)

270,000
(To record sale of treasury stock for above the cost price)

Table (2)

Description:

  • Cash is an asset

b.

To determine

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

c.

To determine

Discuss the reason, for which Incorporation L has purchased the treasury stock.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Chapter 13 Solutions

Financial Accounting
Show all chapter solutions
add
Ch. 13 - Dividends per share Reinhardt Furniture Company...Ch. 13 - Dividends per share Zero Calories Company has...Ch. 13 - Entries for issuing stock On May 23, Stoltz Realty...Ch. 13 - Entries for issuing stock On January 22, Zentric...Ch. 13 - Entries for cash dividends The declaration,...Ch. 13 - Entries for cash dividends The declaration,...Ch. 13 - Entries for stock dividends Pro-Builders...Ch. 13 - Entries for stock dividends Antique Buggy...Ch. 13 - Entries for treasury stock On January 31,...Ch. 13 - Entries for treasury stock On May 27, Hydro...Ch. 13 - Reporting stockholders equity Using the following...Ch. 13 - Reporting stockholders equity Using the following...Ch. 13 - Retained earnings statement Rockwell Inc. reported...Ch. 13 - Retained earnings statement Noric Cruises Inc....Ch. 13 - Earnings per share Financial statement data for...Ch. 13 - Earnings per share Financial statement data for...Ch. 13 - Dividends per share Imaging Inc., a developer of...Ch. 13 - Dividends per share Lightfoot Inc., a software...Ch. 13 - Entries for issuing par stock On October 31,...Ch. 13 - Entries for issuing no-par stock On February 12,...Ch. 13 - Issuing stock for assets other than cash On April...Ch. 13 - Selected stock transactions Alpha Sounds Corp., an...Ch. 13 - Issuing stock Willow Creek Nursery, with an...Ch. 13 - Issuing stock Work Place Products Inc., a...Ch. 13 - Entries for cash dividends The declaration,...Ch. 13 - Entries for stock dividends Senior Life Co. is an...Ch. 13 - Effect of stock split Copper Grill Restaurant...Ch. 13 - Effect of cash dividend and stock split Indicate...Ch. 13 - Selected dividend transactions, stock split...Ch. 13 - Treasury stock transactions Lava Lake Inc. bottles...Ch. 13 - Treasury stock transactions Lawn Spray Inc....Ch. 13 - Treasury stock transactions Biscayne Bay Water...Ch. 13 - Reporting paid-in capital The following accounts...Ch. 13 - Stockholders Equity section of balance sheet The...Ch. 13 - Stockholders Equity section of balance sheet...Ch. 13 - Retained earnings statement Sumter Pumps...Ch. 13 - Stockholders Equity section of balance sheet List...Ch. 13 - Statement of stockholders equity The stockholders...Ch. 13 - EPS Junkyard Arts, Inc., had earnings of 316,000...Ch. 13 - EPS Pacific Gas and Electric Company is a large...Ch. 13 - EPS Caterpillar Inc. and Deere Company are two...Ch. 13 - Dividends on preferred and common stock Pecan...Ch. 13 - Stock transactions for corporate expansion On...Ch. 13 - Selected stock transactions The following selected...Ch. 13 - Entries for selected corporate transactions Morrow...Ch. 13 - Entries for selected corporate transactions...Ch. 13 - Dividends on preferred and common stock Yosemite...Ch. 13 - Stock transaction for corporate expansion Pulsar...Ch. 13 - Selected stock transactions Diamondback Welding ...Ch. 13 - Entries for selected corporate transactions Nav-Go...Ch. 13 - Entries for selected corporate transactions West...Ch. 13 - Ethics in Action Tommy Gunn is a division manager...Ch. 13 - Ethics in Action Lou Hoskins and Shirley Crothers...Ch. 13 - Communication Motion Designs Inc. has paid...Ch. 13 - Ethics in Action Bernie Ebbers, the CEO of...Ch. 13 - Issuing stock Epstein Engineering Inc. began...

Additional Business Textbook Solutions

Find more solutions based on key concepts
Show solutions add
What is a composite primary key?

Accounting Information Systems

COST OF COMMON EQUITY The Bouchard Companys EPS was 6 50 in 2014, up from 4 42 in 2009. The company pays out 40...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

What is the purpose of the strategic IT plan?

Pkg Acc Infor Systems MS VISIO CD

Contrast a win-win negotiator with a win-lose negotiator.

Purchasing and Supply Chain Management

Describe the four basic time-value-of-money problems.

Cornerstones of Financial Accounting