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#17) Exceptional Marketing Corporation reported the following stockholders\' equ

ID: 2716341 • Letter: #

Question

#17) Exceptional Marketing Corporation reported the following stockholders' equity at Decemebr 31 (adapted and in millions):

Common Stock.................................$256

Additonal paid-in capital............          275

Retained earings..............................2,129

Treasury Stock............................... (671)

Total stockholders' equity..............$ 1,989

During the nest year, Exceptional Marketing purchsed treasury stock at a cost of $23. million and resold treasury stock for $7 million (this treasury stock has cost Exceptional Marketing $2million). Record the purcahse and resale of Exception Marketing's treasury stosck. Overall, how much did stockholders' equity increase or decrease as a result of the two treasury stock transaction?

Record the purcahse and resale of Eceptional Marketing's treasury stock (record debits first, then credits. Exclude explanations from any juornal entries. Enter amounts in millions.)

First, record the purcahse of the treasury stock.

                                                            Journal Entry

                                                             Accounts                                                              Debits                      Credits

                                                                                                                                                           Millions

(Cash, Common Stock, Dividends payable, Paid-in capital in excess of par,                 __________             ________

Paid-in Capital from Treasury Stock Transactons, Preferred Stock,

Retained Earnings, Treasury Stock)

___________________________________________________________                    ____________             ________

___________________________________________________________                    ____________             _________

___________________________________________________________                     ___________              __________

Explanation / Answer

Ans. Record the purcahse and resale of Exception Marketing's treasury stock.

                                                   Journal Entries

1) Purcahse of the treasury stock.

Debit                         Credit                  Million$       

Treasury stock             Cash                      23

2) Resold treasury stock for $7 million (this treasury stock has cost Exceptional Marketing $2million).

If treasury shares are reissued, Cash is debited for the amount received and Treasury Stock is credited for the cost of the shares. Any difference may be debited or credited to Paid-in Capital in Excess of Par.

Debit                         Credit                    Million$

Cash                                                         7

                           Treasury Stock                  2

                           Paid-in Capital in Excess of Par                 5

3) Total Stockholders' equity increase or decrease as a result of the two treasury stock transaction is as follows.

Total stockholder's equity after above transactions is $1957 million.

                          

$million purchase Resold closing Common Stock. 256 -23 -7 240 Additonal paid-in capital. 275 5 280 Retained earings 2129 2129 Treasury Stock            (671) 23 2            (692) Total stockholders' equity 1989 0 1,957