Question Completion with Options:
A. Paid - In Capital from Treasury Stock Transactions is credited for $450,000.
B. Treasury Stock-Common is debited for $150,000.
C. Common Stock-$5.00 Par Value is credited for $300,000.
D. Retained Earnings is debited for $450,000.
Answer:
Land Corporation
The entry that is included to record the corporation's purchase of 30,000 shares of its common stock for $15 per share is:
B. Treasury Stock-Common is debited for $150,000.
Explanation:
a) Data and Calculations:
Common Stock, $5 par, 219,000 shares authorized,
179,000 shares issued $895,000
Paid in Capital in Excess of Par—Common 206,000
Retained Earnings 232,000
Total Stockholders' Equity $1,333,000
Purchase of 30,000 shares for $15 per share
The journal entries to record this transaction are:
Debit Treasury stock $150,000 ($5 * 30,000)
Debit Paid-in Capital in Excess of Par - Common $300,000 ($10 * 30,000)
Credit Cash $450,000 ($15 * 30,000)
b) The above is used when the par value method of recording the Treasury Stock is applied. When the cost (cash) method is applied, the treasury stock is debited with $450,000 and the cash account is credited with the same amount.
