Question

SprayCo Inc. develops and produces spraying equipment for lawn maintenance and industrial uses. On March 9 of the current year, SprayCo reacquired 19,100 shares of its common stock at $20 per share. On June 9, 13,700 of the reacquired shares were sold at $25 per share, and on November 13, 4,000 of the reacquired shares were sold at $21. Required:

a. Journalize the transactions of March 9, June 9, and November 13. 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. What is the balance in Treasury Stock on December 31 of the current year?

d. How will the balance in Treasury Stock be reported on the balance sheet?

Answer 1

Answer:

treasury stock    382,000 debit

             cash                  382,000 credit

cash          342,500 debit

  treasury stock               274,000 credit

 additional paid-in TS       68,500 credit

cash          84,000 debit

  treasury stock                80,000 credit

 additional paid-in TS         4,000 credit

additional paid-in TS 72,500

Treasury Stock           28,000

The Treasury Stock will be reported as a decrease to the equity.

Explanation:

19,100 shares x $20 per share = 382,000

13,700 shares x $20 per share = 274,000

13,700 shares x $25 per share = 342,500

additional paid-in = 68,500

4,000 shares x $21 per share  =     84,000

4,000 shares x $20 per share =    (80,000)

          additional paid-in                   4,000

68,500 + 4,000 = 72,500 additional paid-in TS

TS 382,000 - 274,000 - 80,000 = 28,000