The stockholder\'s equity of Thomas Company as of December 31, 2007,was as follo

Question

The stockholder's equity of Thomas Company as of December 31, 2007,was as follows:
Common stock, $1 par, authorized 275,000 shares
     240,000 shares issued andoutstanding.............................                        $240,000
Paid-in capital in excess ofpar..............................................                        3,840,000
RetainedEarnings...............................................................                            900,000

On June 1, 2008, Thomas reacquired 15,000 shares of its commonstock at $16. The following transactions occurred in 2008 withregard to these shares.
July 1 Sold 5,000 shares at $20
Aug 1 Sold 7,000 shares at $14
Sept 1 Retired 1,000 shares

Using the cost method and par value method for treasury stock:
Prepare journal entries and stockholders' equity assuming RetainedEarnings of $1,005,000 (before the effects of treasury stocktransactions)

Explanation / Answer

1-Jun-08 Treasury Stock 240,000.00     Cash 240,000.00 1-Jul-08 Cash 100,000.00       Treasury Stock    80,000.00    Paid in Capital from treasury Stock 20,000.00 1-Aug-08 Cash 98,000.00 Paid in Capital from treasury Stock 14,000.00       Treasury Stock 112,000.00 1-Sep-08 Paid in Capital applicable to retired Shares 16,000.00       Treasury Stock 16,000.00

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