Question

Prepare journal entries for the following transactions (use the cost method for re-issuance):

1. On 1/1/2016, company EXO issued 20,000 common shares, each having a par value of $1 at $10 per share.

2. On 7/1/2016, EXO repurchased 5,000 shares of common stock at $8 per share.

3. On 10/1/2016, EXO re-issued 1,000 shares of the treasury stock repurchased on 7/1 for $10 per share.

4. On 11/1/2016, EXO re-issued another 2,000 shares of the treasury stock repurchased on 7/1 for $7.5 per share. 5. On 12/1/2016, EXO re-issued another 1,000 shares of the treasury stock repurchased on 7/1 for $7 per share.

Answer 1

Journal Entries (Amounts in $)

No.	Date	Account Titles and Explanation	Debit	Credit
1	1/1/16	Cash (20,000 shares*$10)	200,000
		Common Stock (20,000 shares*$1 par)		20,000
		Paid-in Capital in excess of par value-Common Stock (200,000-20,000)		180,000
2	7/1/16	Treasury Stock (5,000 shares*$8 per share)	40,000
		Cash		40,000
3	10/1/16	Cash (1,000 shares*$10)	10,000
		Treasury Stock (1,000 shares*$8 cost)		8,000
		Additional paid-in capital-Treasury Stock (10,000-8,000)		2,000
4	11/1/16	Cash (2,000 shares*$7.50)	15,000
		Additional paid-in capital-Treasury Stock (Bal. fig) (16,000-15,000)	1,000
		Treasury Stock (2,000 shares*$8 cost)		16,000
5	12/1/16	Cash (1,000 shares*$7)	7,000
		Additional paid-in capital-Treasury Stock (8,000-7,000)	1,000
		Treasury Stock (1,000 shares*$8 cost)		8,000