Question

At December 31, 2020, the balance sheet of Meca International included the following shareholders' equity accounts:

Shareholders’ Equity	($ in millions)
Common stock, 65 million shares at $1 par	$	65
Paid-in capital—excess of par		490
Retained earnings		600

Required:
Assuming that Meca International views its share buybacks as treasury stock, record the appropriate journal entry for each of the following transactions: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

1. On February 12, 2021, Meca reacquired 2 million common shares at $19 per share.
2. On June 9, 2022, Meca reacquired 3 million common shares at $14 per share.
3. On May 25, 2023, Meca sold 3 million treasury shares at $22 per share. Determine cost as the weighted-average cost of treasury shares.
4. For the previous transaction, assume Meca determines the cost of treasury shares by the FIFO method.

Borner Communications’ articles of incorporation authorized the issuance of 160 million common shares. The transactions described below effected changes in Borner’s outstanding shares. Prior to the transactions, Borner’s shareholders’ equity included the following:

Shareholders’ Equity	($ in millions)
Common stock, 145 million shares at $1 par	$	145
Paid-in capital – excess of par		435
Retained earnings		255

Required:
Assuming that Borner Communications retires shares it reacquires (restores their status to that of authorized but unissued shares), record the appropriate journal entry for each of the following transactions: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

1. On January 7, 2021, Borner reacquired 4 million shares at $6.00 per share.
2. On August 23, 2021, Borner reacquired 6 million shares at $3.50 per share.
3. On July 25, 2022, Borner sold 5 million common shares at $7 per share.

Answer 1

Question-1
Date	General Journal	Debit	Credit
February 12, 2021	Treasury Stock	38		=2*19
	Cash		38
June 9, 2022	Treasury Stock	42		=3*14
	Cash		42
May 25, 2023	Cash	66		=3*22
	Paid-in capital—share repurchase		18
	Treasury stock		48	=(38+42)*3/5
May 25, 2023	Cash	66
	Paid-in capital—share repurchase		14
	Treasury stock		52	=(2*19)+(1*14)
Question-2
Date	General Journal	Debit	Credit
January 07,2021	Common stock	4		=4*1
	Paid-in capital—excess of par	12		=4*3
	Retained earnings	8
	Cash		24	=4*6
August 23,2021	Common stock	6		=6*1
	Paid-in capital—excess of par	18		=6*3
	Paid-in capital—share repurchase		3
	Cash		21	=6*3.50
July 25, 2022	Cash	35		=5*7
	Common stock		5
	Paid-in capital—excess of par		30