BuyFindarrow_forward

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

Solutions

Chapter
Section
BuyFindarrow_forward

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

Treasury stock transactions
Obj.5
Blue Moon Water Supply Inc. botles and distributes spring water. On July 17 of the current year. Blue Moon Water Supply reacquired 55,000 shares of its common stock at $60 per share.
a.What is the balance of Treasury Stock on December 31 of the current year?
b.Where will the balance of Treasury Stock be reporled on the balance sheets?
c.For what reasons might Blue Moon Water Supply have purchased the treasury stock?

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.

Requirement-a:

To Indicate:

The Balance of the Treasury Stock on Dec. 31 of the current year

Explanation

The Balance of the Treasury Stock on Dec. 31 of the current year is calc...

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.

Requirement-b:

To Indicate:

The Balance of the Treasury Stock on Dec. 31 of the current year to be reported on the balance sheet

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.

Requirement-c:

To Indicate:

The reason for purchase of 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

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

What is the primary purpose of reversing entries?

College Accounting, Chapters 1-27

What is participative budgeting? Discuss some of its advantages.

Managerial Accounting: The Cornerstone of Business Decision-Making

Sales Returns and Allowances is debited for the amount of the sale, including the sales tax on that amount.

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

What is inflation and what causes it?

Principles of Macroeconomics (MindTap Course List)

Identify the four elements of the marketing mix.

Foundations of Business (MindTap Course List)

How does a cost-efficient capital market help reduce the prices of goods and services?

Fundamentals of Financial Management (MindTap Course List)

INFLATION CROSS-PRODUCT An analyst is evaluating securities in a developing nation where the inflation rate is ...

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 a base period?

Cornerstones of Cost Management (Cornerstones Series)