Mystic Lake Inc. bottles and distributes spring water. On July 9 of the current
ID: 2541652 • Letter: M
Question
Mystic Lake Inc. bottles and distributes spring water. On July 9 of the current year, Mystic Lake reacquired 6,400 shares of its common stock at $63 per share. On September 22, Mystic Lake sold 4,500 of the reacquired shares at $70 per share. The remaining 1,900 shares were sold at $60 per share on November 23.
a. Journalize the transactions of July 9, September 22, and November 23. If an amount box does not require an entry, leave it blank.
July 9 Sept. 22 Nov. 23 What is the balance in Paid-In Capitalfrom Sale ofTreasury Stock on December 31 ofthe current year? c. For what reasons might Mystic Lake Inc. have purchased the treasury stock?Explanation / Answer
a) Journal entry :
b) Balance in paid in capital from sale of treasury stock on december 31 = 25800
c) Mystic Lake Inc. have purchased the treasury stock for maintain a favorable market for its stock.
date accounts & explanation debit credit July 9 Treasury stock (6400*63) 403200 Cash 403200 Sept 22 Cash (4500*70) 315000 Treasury stock (4500*63) 283500 Paid in capital from sale of treasury stock (4500*7) 31500 Nov 23 Cash (1900*60) 114000 Paid in capital from sale of treasury stock 5700 Treasury stock (1900*63) 119700Related Questions
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