On its December 31, 20x6, balance sheet, Block Corporation reported its stockholders’ equity as follows: Common stock—$5 par value, 1,000,000 shares authorized, 100,000 shares issued and outstanding $500,000 Paid-in capital in excess of par value, common 100,000 Retained earnings 400,000 Total stockholders’ equity $1,000,000 During 20x7, the following transactions occurred:
1. Reacquired 2,500 shares at $7 per share.
2. Sold 1,200 shares of treasury stock at $8 per share.
3. Sold 500 shares of treasury stock at $6 per share.
Net income for 20x7 amounted to $100,000.
a. Prepare entries in journal form for the three transactions involving treasury stock.
b. Compute the amount of total stockholders’ equity to be reported on the December 31, 20x7, balance sheet.
|No||account and explanation||debit||credit|
|1||Treasury stock (2500*7)||17500|
|(To record treasury stock purchased)|
|Treasury stock (1200*7)||8400|
|Paid in capital from sale of treasury stock||1200|
|(To record treasury stock sold)|
|Paid in capital from sale of treasury stock||500|
|treasury Stock (500*7)||3500|
|(To record sale of treasury stock)|
|Paid in capital|
|Paid-in capital in excess of par value, common||100000|
|paid in capital from sale of treasury stock||700|
|Total paid in capital||600700|
|Less; Treasury stock (800 shares)||-5600|
|Total stockholder's equity||1095100|
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