On January 1, 2014, the stockholders On January 1, 2014, the stockholders On Jan

Question

On January 1, 2014, the stockholders On January 1, 2014, the stockholders On January 1, 2014, the stockholders On January 1, 2014, the stockholders On January 1, 2014, the stockholders' equity section of Newline Corporation shows common stock ($5 par value) $1,500,000; paid-in capital in excess of par $1,000,000; and retained earnings $1,200,000. During the year, the following treasury stock transactions occurred. Journalize the treasury stock transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Restate the entry for September 1, assuming the treasury shares were sold at $12 per share. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Explanation / Answer

Date Account/Description
Mar.1
Dr Treasury stock 750,000 (50,000 x $15)
Cr Cash 750,000

July 1
Dr Cash 170,000
Cr Treasury stock 150,000 (10,000 at COST of $15)
Cr Paid-in cap. from treasury stock 20,000
At this point your Paid-in cap. from treasury stock stands at $20,000 (credit).

Sept. 1
Dr Cash 112,000 (8,000 x $14)
Dr Paid-in cap. from treasury stock 8,000
Cr Treasury stock 120,000 (8,000 at COST of $15)

Restate the entry for September 1, assuming the treasury shares were sold at $12 per share.

Sept. 1
Dr Cash 96,000 (8,000 x $12)
Dr Paid-in cap. from treasury stock $20,000 (this is the max you can debit this account)
Dr Retained earnings $4,000 (this is the 'plug', or the balancing figure)
Cr Treasury stock 120,000 (8,000 at COST of $15)

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