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

ID: 2426734 • Letter: L

Question

Lawn Smart Inc. develops and produces spraying equipment for lawn maintenance and industrial uses. On May 29 of the current year, Lawn Smart Inc. reacquired 19,100 shares of its common stock

The stock outstanding when a corporation has issued only one class of stock.

at $20 per share. On August 11, 13,700 of the reacquired shares were sold at $25 per share, and on October 30, 4,000 of the reacquired shares were sold at $21.

Required:

Capital contributed to a corporation by the stockholders and others.

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

Income Summary

A. Journalize the transactions of May 29, August 11, and October 30. Refer to the Chart of Accounts for exact wording of account titles.

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JOURNAL

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Solution

1

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B. What is the balance in Paid-In Capital

Capital contributed to a corporation by the stockholders and others.

from Sale of Treasury Stock on December 31 of the current year?selector 1

Debit

Credit

Points:

Feedback

Check My Work

Explanation

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

selector 1

Credit

Debit

Points:

Feedback

Check My Work

Explanation

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

selector 1

As an asset

As an addition to stockholder's equity

As a deduction from stockholder's equity

Treasury Stock is not reported on the balance sheet

710

A. Journalize the transactions of May 29, August 11, and October 30. Refer to the Chart of Accounts for exact wording of account titles. B. What is the balance in Paid-In Capital

Capital contributed to a corporation by the stockholders and others.

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?

CHART OF ACCOUNTS Lawn Smart Inc. General Ledger ASSETS 110 Cash 120 Accounts Receivable 131 Notes Receivable 132 Interest Receivable 141 Merchandise Inventory 145 Office Supplies 151 Prepaid Insurance 181 Land 193 Equipment 194 Accumulated Depreciation-Equipment LIABILITIES 210 Accounts Payable 221 Notes Payable 226 Interest Payable 231 Cash Dividends Payable 236 Stock Dividends Distributable 241 Salaries Payable 261 Mortgage Note Payable EQUITY 311 Common Stock 312 Paid-In Capital in Excess of Par-Common Stock 315 Treasury Stock 321 Preferred Stock 322 Paid-In Capital in Excess of Par-Preferred Stock 331 Paid-In Capital from Sale of Treasury Stock 340 Retained Earnings 351 Cash Dividends 352 Stock Dividends 390

Income Summary

A. Journalize the transactions of May 29, August 11, and October 30. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

DATE DESCRIPTION POST. REF. DEBIT CREDIT

1

2

3

4

5

6

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8

Solution

DATE DESCRIPTION POST. REF. DEBIT CREDIT

1

2

3

4

5

6

7

8

B. What is the balance in Paid-In Capital

Capital contributed to a corporation by the stockholders and others.

from Sale of Treasury Stock on December 31 of the current year?selector 1

Debit

Credit

Points:

Feedback

Check My Work

Explanation

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

selector 1

Credit

Debit

Points:

Feedback

Check My Work

Explanation

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

selector 1

As an asset

As an addition to stockholder's equity

As a deduction from stockholder's equity

Treasury Stock is not reported on the balance sheet

REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Merchandise Sold 515 Credit Card Expense 520 Salaries Expense 531 Advertising Expense 532 Delivery Expense 533 Selling Expenses 534 Rent Expense 535 Insurance Expense 536 Office Supplies Expense 537 Organizational Expenses 562 Depreciation Expense-Equipment 590 Miscellaneous Expense

710

Explanation / Answer

A

29May Treasury Stock(19100 *$20) Dr.$382000

To cash 382000

11 Aug. cash (13700*$25) Dr.$342500

To Treasury stock(13700 *$20) $274000

To Paid-In Capital from Sale of Treasury Stock $68500

30 Oct cash (4000*$21) Dr.$ 84000

To Treasury stock(4000 *$20) $80000

To Paid-In Capital from Sale of Treasury Stock $4000

B balance in Paid-In Capital Capital contributed = (274000 +68500) + (80000 +4000)

   = $426500

C. balance in Treasury Stock on December 31 = 19100 share - (13700 share + 4000 share)

   = 1400 shares

   Treasury stock = 1400 shares* $20

= $28000