Lava Lake Inc. bottles and distributes spring water. On February 11 of the curre

Question

Lava Lake Inc. bottles and distributes spring water. On February 11 of the current year, Lava Lake reacquired 38,700 shares of its common stock at $45 per share. On April 30, Lava Lake Inc. sold 33,500 of the reacquired shares at $48 per share. On August 22, Lava Lake Inc. sold 5,200 shares at $44 per share Required A. Journalize the transactions of February 11, April 30, and August 22. Refer to the Chart of Accounts for exact wording of account titles. B. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year? C. For what reasons might Lava Lake have purchased the treasury stock?

Explanation / Answer

Date Description Debit Credit Assets liabilities Equity 11-Feb Treasury stock 1741500 -cash -Treasury stock cash (38,700*45) 1741500 -1,741,500 -1,741,500 30-Apr Cash (33500*48) 1608000 cash treasury stock Treasury stock 1507500 paid in capital from sale paid in capital from sale of TS 100500 1608000 1507500 100500 22-Aug Cash (5200*44) 228800 Cash paid in capital paid in capital from sale of TS 5200 TS Treasury stock 234000 228800 -5200 234000 b) balancein paid in capital from sale of Treasury stock 95300 (100500-5200) c) For reissuance to employees as a bonus according to stock repurchase agreements to provide shares for resale to employees to support market price of the stock

Related Questions

Navigate

• Browse (All)
• Browse L
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.