Question

At the end of 2018, Durham Mining Corp. reported the following in Shareholders’ Equity as indicated...

At the end of 2018, Durham Mining Corp. reported the following in Shareholders’ Equity as indicated in Table-1 below:

Table-1:

Common shares, no-par value, authorized, unlimited shares, issued 2,000,000 shares. Outstanding 1,900,000 shares $      3,200,000
Contributed Capital on Treasury Stock Transactions                50,000
Retained Earnings          4,000,000
Treasury Stock, 100,000 common shares (700,000)

The company had treasury stock transactions in the following sequence during 2019:

i) Purchased 50,000 common shares as treasury stock at $10 per share.
ii) Reissued 20,000 treasury shares at $11 per share.
iii) Reissued 25,000 treasury shares at $5 per share.

Required:
a) Prepare journal entries for the treasury stock transactions
b) Calculate the balances in each equity account after the effects of the transactions in requirement (a). (ie: update the Table-1 information)

Homework Answers

Answer #1

Journal entry

No General Journal Debit Credit
i Treasury Stock 500000
Cash 500000
2 Cash (20000*11) 220000
Treasury Stock 200000
Paid in capital from sale of treasury stock 20000
3 Cash (25000*5) 125000
Paid in capital from sale of treasury stock 70000
Retained earnings 55000
Treasury Stock (25000*10) 250000

Stockholder's equity

Contributed capital
Common shares, no-par value, authorized, unlimited shares, issued 2,000,000 shares. Outstanding 1,900,000 shares 3200000
Total Contributed capital 3200000
Retained earnings 3945000
Total 7145000
Treasury Stock -750000
Total Stockholder's equity 6395000
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