P15-2 (LO2,4) (Treasury Stock Transactions and Presentation) Clemson Company had
ID: 2330600 • Letter: P
Question
P15-2 (LO2,4) (Treasury Stock Transactions and Presentation) Clemson Company had the following stockholders' equity as of January 1, 2017 Common stock, $5 par value, 20,000 shares issued Paid-in capital in excess of par-common stock Retained earnings $100,000 300,000 320,000 $720,000 Total stockholders' equity During 2017, the following transactions occurred. Feb. 1 Mar. 1 Mar: 18 Apr. 22 Clemson repurchased 2,000 shares of treasury stock at a price of $19 per share. 800 shares of treasury stock repurchased above were reissued at $17 per share. 500 shares of treasury stock repurchased above were reissued at $14 per share. 600 shares of treasury stock repurchased above were reissued at $20 per share Instructions (a) Prepare the journal entries to record the treasury stock transactions in 2017, assuming Clemson uses the cost method. (b) Prepare the stockholders' equity section as of April 30, 2017. Net income for the first 4 months of 2017 was $130,000.Explanation / Answer
Answers
Date
Accounts title
Debit
Credit
Working
Feb-01
Treasury Stock
$ 38,000.00
[2000 shares x $19 cost]
Cash
$ 38,000.00
[2000 shares x $19 cost]
(share repurchased)
Mar-01
Cash
$ 13,600.00
[800 shares x $17]
Retained Earnings
$ 1,600.00
[800 shares x $12]
Treasury Stock
$ 15,200.00
[800 shares x $19 cost]
(shares re issued)
Mar-18
Cash
$ 7,000.00
[500 shares x $14]
Retained Earnings
$ 2,500.00
[500 shares x $5]
Treasury Stock
$ 9,500.00
[500 shares x $19 cost]
(shares re issued)
---Working for balances---
Transactions
Retained Earnings
Treasury Stock
Beginning Balance
$ 320,000.00
Feb-01
$ -
$ 38,000.00
Mar-01
$ (1,600.00)
$ (15,200.00)
Mar-18
$ (2,500.00)
$ (9,500.00)
Apr-22
$ -
$ (11,400.00)
Net Income
$ 130,000.00
$ -
Ending Balance
$ 445,900.00
$ 1,900.00
Answer:
STOCKHOLDER's EQUITY
Common Stock
$ 100,000.00
Paid in Capital in excess of Par - Common Stock
$ 300,000.00
Paid in Capital - Treasury Stock
$ 600.00
Total Paid in Capital
$ 400,600.00
Retained Earnings
$ 445,900.00
$ 846,500.00
Treasury Stock
$ (1,900.00)
Total Stockholder's Equity
$ 844,600.00
Date
Accounts title
Debit
Credit
Working
Feb-01
Treasury Stock
$ 38,000.00
[2000 shares x $19 cost]
Cash
$ 38,000.00
[2000 shares x $19 cost]
(share repurchased)
Mar-01
Cash
$ 13,600.00
[800 shares x $17]
Retained Earnings
$ 1,600.00
[800 shares x $12]
Treasury Stock
$ 15,200.00
[800 shares x $19 cost]
(shares re issued)
Mar-18
Cash
$ 7,000.00
[500 shares x $14]
Retained Earnings
$ 2,500.00
[500 shares x $5]
Treasury Stock
$ 9,500.00
[500 shares x $19 cost]
(shares re issued)
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