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 50,000 shares of its common stock at $51 per share. On June 14, 24,000 of the reacquired shares were sold at $60 per share, and on November 23, 18,000 of the reacquired shares were sold at $56.
a. Journalize the transactions of January 31, June 14, and November 23. For a compound transaction, if an amount box does not require an entry, leave it blank.
Jan. 31
June. 14
Nov. 23
The repurchase of shares, known as treasury stock, is typically recorded using the cost method. When the treasury stock is resold, what is the company receiving? What is it giving up? Keep in mind the price paid to buy the treasury stock and the price the shares are resold for at a later date.

b. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year?$ Credit
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. Journalize the transactions of January 31, June 14, and November 23.

Explanation:

                                          deb cre

jan-31 Treasury Stock 2550000  

(50000*51)  

Cash                                          2550000

   

jun-14 Cash                    1440000  

(24000*60)  

Treasury Stock                            1224000

(24000*51)  

Paid in capital for treasury stock      216000

   

nov-23 Cash                       1008000  

(18000*56)  

Treasury stock                               918000

(18000*51)  

Paid in capital for treasury stock         90000