Question

Mystic Lake Inc. bottles and distributes spring water. On July 9 of the current year, Mystic Lake reacquired 5,600 shares of its common stock at $79 per share. On September 22, Mystic Lake sold 3,900 of the reacquired shares at $88 per share. The remaining 1,700 shares were sold at $76 per share on November 23.

a. Journalize the transactions of July 9, September 22, and November 23. If an amount box does not require an entry, leave it blank.

July 9	Treasury Stock
	Cash
Sept. 22	Cash
	Treasury Stock
	Paid-In Capital from Sale of Treasury Stock
Nov. 23	Cash
	Paid-In Capital from Sale of Treasury Stock
	Treasury Stock

b. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year?
$ Credit

c. For what reasons might Mystic Lake Inc. have purchased the treasury stock?
All of these reasons.

Answer 1

a
July 9	Treasury Stock	442400		=5600*79
	Cash		442400
Sept. 22	Cash	343200		=3900*88
	Treasury Stock		308100	=3900*79
	Paid-In Capital from Sale of Treasury Stock		35100
Nov. 23	Cash	129200		=1700*76
	Paid-In Capital from Sale of Treasury Stock	5100
	Treasury Stock		134300	=1700*79
b
	Balance in Paid-In Capital from Sale of Treasury Stock
	$30000 credit (35100-5100)