Greeve Corporation had the following stockholders’ equity accounts on January 1,

Question

Greeve Corporation had the following stockholders’ equity accounts on January 1, 1999: Common Stock ($1 par) $400,000, Paid-in Capital in Excess of Par Value $500,000, and Retained Earnings $100,000. In 1999, the company had the following treasury stock transactions.
Mar. 1 Purchased 5,000 shares at $7 per share.
June 1 Sold 1,000 shares at $10 per share.
Sept. 1 Sold 2,000 shares at $9 per share.
Dec. 1 Sold 1,000 shares at $6 per share.

Greeve Corporation uses the cost method of accounting for treasury stock. In 1999, the company reported net income of $50,000.

Instructions:

Journalize the treasury stock transactions

Explanation / Answer

DATE DETAILS Dr Cr 1-Mar Common Stock A/c $5,000 Premium on Commont stock A/c $30,000 Bank A/C $35,000 Common stock being repurchased which will result in reduction of share Capital 1-Jun Bank A/C $10,000 Common Stock A/c $1,000 Premium on Commont stock A/c $9,000 New stock being issued at a premium of $ 9 per share Sep 1 Bank A/C $18,000 Common Stock A/c $2,000 Premium on Commont stock A/c $16,000 New stock being issued at a premium of $ 8 per share 1-Dec Bank A/C $6,000 Common Stock A/c $1,000 Premium on Commont stock A/c $5,000 New stock being issued at a premium of $ 5 per share 31 Dec Profit & Loss A/c $50,000 Retained Earnings $50,000 Net Income of the year transferred to Retained Earnings

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