Question

Lawn Spray Inc. develops and produces spraying equipment for lawn maintenance and industrial uses. On January 31 of the current year, Lawn Spray Inc. reacquired 19,600 shares of its common stock at $19 per share. On June 14, 13,700 of the reacquired shares were sold at $25 per share, and on November 23, 4,700 of the reacquired shares were sold at $20.
Required:

A. Journalize the transactions of January 31, June 14, and November 23. 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:

A. The Journal entry is shown below:-

B. $86,900

C.$22,800

Explanation:

The Journal entry is shown below:-

1. Treasury Stock Dr, $372,400  

(19,600 shares × $19)

      To Cash $372,400

(Being cash is recorded)

2. Cash Dr, $342,500  

(13,700 × $25)

        To Treasury stock 260,300

(13,700 × $19)

         To Paid-In Capital from sale of treasury stock $82,200

(Being cash is recorded)

3. Cash Dr, $94,000  

(4,700 × $20)

         To Treasury Stock $89,300

(4,700 × $19)

        To Paid-In Capital from Sale of Treasury Stock $4,700

(Being reacquired shares is recorded)

B. Balance in Paid-In Capital from Sale of Treasury Stock = $82,200 + $4,700

= $86,900

C. Balance in Treasury Stock = $372,400 - $260,300 - $89,300

= $22,800