Please provide the answer in detail! Question 1 Martinez Limited has 57,200 comm

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Please provide the answer in detail!

Question 1 Martinez Limited has 57,200 common shares outstanding, with an average issue price per share of $6. On August 1, 2017, the company reacquired and cancelled 720 shares at $42 per share. There was contributed surplus of $0.25 per share at the time of the reacquisition (total $14,300), which arose from net excess of proceeds over cost on a previous cancellation of common shares. Prepare the journal entry to record this transaction if Martinez prepares financial statements in accordance with ASPE. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit Aug. 1

Explanation / Answer

August 1 Common stock a/c Dr $ 4,320(720*6)

Shares forfeiture a/c Dr $ 14,300(previous cancellation of shares)

Retained Earnings a/c Dr $ 11,620((30240-4320-14300)

To Bank a/c Cr $ 30,240(720*42)

August 1 Retaining Earnings a/c Dr $ 4,320

To Capital Redemption Reserve a/c $ 4,320--------To maintain the capital of the company

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