Accounting for Treasury Stock On January 3, 2013, Tommyboy Corporation repurchas

Question

Accounting for Treasury Stock

On January 3, 2013, Tommyboy Corporation repurchases 250,000 shares of its outstanding common stock for $18 per share. On May 1, 2013, Tommyboy sells 80,500 shares of treasury stock for $12 per share. On October 1, 2013, Tommyboy sells 40,000 shares of its treasury stock for $31 per share.

Required:

1. Prepare the journal entries to record these transactions. For a compound transaction, if an amount box does not require an entry, leave it blank.

2013 Jan. 3

Accounts Payable

Additional Paid-In Capital-Treasury Stock

Cash

Retained Earnings

Treasury Stock

Correct 2 of Item 1

Correct 3 of Item 1

Accounts Payable

Additional Paid-In Capital-Treasury Stock

Cash

Retained Earnings

Treasury Stock

Correct 4 of Item 1

Correct 5 of Item 1

(Record purchase of treasury shares)

May 1

Accounts Payable

Additional Paid-In Capital-Common Stock

Cash

Common Stock

Treasury Stock

Correct 8 of Item 1

Correct 9 of Item 1

Correct 10 of Item 1

Accounts Receivable

Additional Paid-In Capital- Treasury Stock

Common Stock

Retained Earnings

Treasury Stock

Correct 11 of Item 1

Correct 12 of Item 1

Correct 13 of Item 1

Accounts Payable

Additional Paid-In Capital-Common Stock

Cash

Retained Earnings

Treasury Stock

Correct 14 of Item 1

Correct 15 of Item 1

Correct 16 of Item 1

(Record reissue of treasury shares)

Oct. 1

Accounts Receivable

Additional Paid-In Capital-Treasury Stock

Cash

Common Stock

Treasury Stock

Correct 19 of Item 1

Correct 20 of Item 1

Correct 21 of Item 1

Accounts Receivable

Cash

Common Stock

Dividends Payable

Treasury Stock

Correct 22 of Item 1

Correct 23 of Item 1

Correct 24 of Item 1

Accounts Payable

Additional Paid-In Capital-Common Stock

Additional Paid-In Capital-Treasury Stock

Cash

Dividends Payable

Correct 25 of Item 1

Correct 26 of Item 1

Correct 27 of Item 1

(Record reissue of treasury shares)

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Solution

2. How will these transactions affect Tommyboy's 2013 income statement?

The income statement is Selectincreaseddecreasednot affectedCorrect 1 of Item 2 by treasury stock transactions because the income statement is Selectincludes business and owners transactions.reserved for transactions with nonowners.Correct 2 of Item 2

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1. Prepare the journal entries to record these transactions. For a compound transaction, if an amount box does not require an entry, leave it blank.

2013 Jan. 3

Accounts Payable

Additional Paid-In Capital-Treasury Stock

Cash

Retained Earnings

Treasury Stock

Correct 2 of Item 1

Correct 3 of Item 1

Accounts Payable

Additional Paid-In Capital-Treasury Stock

Cash

Retained Earnings

Treasury Stock

Correct 4 of Item 1

Correct 5 of Item 1

(Record purchase of treasury shares)

May 1

Accounts Payable

Additional Paid-In Capital-Common Stock

Cash

Common Stock

Treasury Stock

Correct 8 of Item 1

Correct 9 of Item 1

Correct 10 of Item 1

Accounts Receivable

Additional Paid-In Capital- Treasury Stock

Common Stock

Retained Earnings

Treasury Stock

Correct 11 of Item 1

Correct 12 of Item 1

Correct 13 of Item 1

Accounts Payable

Additional Paid-In Capital-Common Stock

Cash

Retained Earnings

Treasury Stock

Correct 14 of Item 1

Correct 15 of Item 1

Correct 16 of Item 1

(Record reissue of treasury shares)

Oct. 1

Accounts Receivable

Additional Paid-In Capital-Treasury Stock

Cash

Common Stock

Treasury Stock

Correct 19 of Item 1

Correct 20 of Item 1

Correct 21 of Item 1

Accounts Receivable

Cash

Common Stock

Dividends Payable

Treasury Stock

Correct 22 of Item 1

Correct 23 of Item 1

Correct 24 of Item 1

Accounts Payable

Additional Paid-In Capital-Common Stock

Additional Paid-In Capital-Treasury Stock

Cash

Dividends Payable

Correct 25 of Item 1

Correct 26 of Item 1

Correct 27 of Item 1

(Record reissue of treasury shares)

Explanation / Answer

Accounting for Treasury Stock On January 3, 2013, Tommyboy Corporation repurchas

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