A company has issued and outstanding 1,000,000 shares of $10 par common stock. T

Question

A company has issued and outstanding 1,000,000 shares of $10 par common stock. The stock was originally issued at $20 per share. On September 1, 2014, a company reacquired 20,000 shares of its $10 par value common stock for $15 per share. The company uses the cost method to account for treasury stock.

a. Document the balance in the stockholder equity account(s) for the issued and outstanding shares of common stock.

b. Prepare the journal entry, in T-account format, using the T-account template provided at the end of this project to recognize the acquisition of their own stock.

Explanation / Answer

a) Issued and outstanding shares = Issued -Repurchased

                                                 = 1,000,000 - 20,000

                                                 = 980,000 shares Issued and outstanding .

b)

Date Title Debit credit sep 1 Treasury stock 300,000 cash 300,000 [being shares repuchased recorded( 20000*15)]

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