Question

On January 1, 2020, the stockholders' equity section of Cheyenne Corp. shows common stock ($4 par value) $1,200,000; paid-in capital in excess of par $1,070,000; and retained earnings $1,220,000. During the year, the following treasury stock transactions occurred.
Mar.1 Purchased 47,000 shares for cash at $15 per share.
July.1 Sold 10,000 treasury shares for cash at $17 per share.
Sept.1 Sold 8,500 treasury shares for cash at $14 per share.
a. Restate the entry for September 1, assuming the treasury shares were sold at $11 per share.

Answer 1

Answer:

The Journal entries are as follows:

On September 1,

(a) Cash A/c [8,500 × $14]                          Dr. $119,000

Excess of paid in capital A/c [8,500 × $1] Dr. $8,500

To treasury stock                                                               $127,500

(To record the treasury shares for cash)

(b) Cash A/c [8,500 × $11]       Dr. $93,500

Excess of paid in capital A/c  Dr. $20,000

Retained earnings A/c            Dr. $14,000

To Treasury stock                                                              $127,500

(To record the restate entry for September 1)