Lawn Spray Inc. develops and produces spraying equipment for lawn maintenance an

Question

Lawn Spray Inc. develops and produces spraying equipment for lawn maintenance and industrial uses. On January 31 of the current year, Lawn Spray Inc. reacquired 50,000 shares of its common stock at $51 per share. On June 14, 24,000 of the reacquired shares were sold at $60 per share, and on November 23, 18,000 of the reacquired shares were sold at $56.

a. Journalize the transactions of January 31, June 14, and November 23. For a compound transaction, if an amount box does not require an entry, leave it blank.

b. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year?
$

c. What is the balance in Treasury Stock on December 31 of the current year?
$

d. How will the balance in Treasury Stock be reported on the balance sheet?

Jan. 31 June. 14 Nov. 23

Explanation / Answer

a.

b.   balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year = 216000 + 90000

=306000

c. balance in Treasury Stock on December 31 of the current year = 2550000 - 1224000 - 918000

= $408000

d. Treasury stock is reported on Balance sheet at last as deduction from total Shareholder's equity .

Date Accounts title Dr Cr Jan. 31 Treasury stock (50000 * $51) 2550000 To cash 2550000 June. 14 Cash (24000 * $60 ) 1440000 To Treasury stock (24000 * $51) 1224000 To Paid-In Capital from Sale of Treasury Stock 216000 Nov. 23 Cash (18000 * $56 ) 1008000 To Treasury stock (18000 * $51) 918000 To Paid-In Capital from Sale of Treasury Stock 90000

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