Question

SprayCo Inc. develops and produces spraying equipment for lawn maintenance and industrial uses. On March 9 of the current year, SprayCo reacquired 12,000 shares of its common stock at $38 per share. On June 9, 7,600 of the reacquired shares were sold at $41 per share, and on November 13, 2,900 of the reacquired shares were sold at $41. a. Journalize the transactions of March 9, June 9, and November 13. If an amount box does not require an entry, leave it blank. Mar. 9 June 9 Nov. 13 b. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year?

Answer 1

Answer:

a.

March 9

Dr Treasury Stock - Common stock            456,000

Cr Cash                                                         456,000

( to record the reacquired of 12,000 common stock at $38 each)

June 9

Dr Cash                                                     311,600

Cr Treasury stock                                     288,800

Cr Paid-in capital                                       22,800

( to record the sell of 7,600 reacquired common stocks at $41 each)

November 13

Dr Cash                                                     118,900

Cr Treasury stock                                    110,200

Cr Paid-in capital                                       8,700

( to record the sell of 2,900 reacquired common stocks at $41 each)

b.

The balance of paid-in capital from sales of treasury stock = 8,700 + 22,800 = 31,500 Credit

Explanation:

Calculation notes:

a.

March 9: The cash spent on reacquired common stock = 12,000 x 38 = $456,000

June 9: Cash receipt on sell of treasury common stock = 7,600 x 41 = 311,600; which will Credited $288,800 into Treasury stock account ( 38 x 7,600) and Credited $22,800 ( (41-38) x 7,600) into Paid-in capital account.

Nov 13 : Cash receipt on sell of treasury common stock = 2,900 x 41 = 118,900; which will Credited $110,200 into Treasury stock account ( 38 x 2,900) and Credited $8,700 ( (41-38) x 2,900) into Paid-in capital account.

b. Calculation is shown above