Question

   Treasury stock. In 2010, Mordica Co. issued 200,000 of its 500,000 authorized shares of $10...

   Treasury stock.

In 2010, Mordica Co. issued 200,000 of its 500,000 authorized shares of $10 par value common stock at $35 per share. In January 2011, Mordica repurchased 15,000 shares at $30 per share. Assume these are the only stock transactions the company has ever had.

Instructions

  1. What are the two methods of accounting for treasury stock?
  2. Prepare the journal entry to record the purchase of treasury stock by the cost method.
  3. 5,000 shares of treasury stock are reissued at $33 per share. Prepare the journal entry to record the reissuance by the cost method.
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

a)There are two method of accounting for treasury stock:

i)cost method :under this method ,stock repurchased are held in treasury and resold as and when needed.

ii)par value method :Under this method ,It is assumed that shares repurchased will eventually be retired .

b)

Account title Debit credit
Treasury stock (15000*30) 450000
cash 450000

c)

Account title Debit credit
cash (5000*33) 165000
Treasury stock (5000*30) 150000
paid in capital in excess of cost -treasury stock 15000
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
on jan 1 2025 intech inc was formed. it authorized to issue 100,009 shares of $10...
on jan 1 2025 intech inc was formed. it authorized to issue 100,009 shares of $10 par common stock. intech immediately issued 20,000 shares of common stock for $22 par share. intech uses cost method to account treasury stock. 1. prepare the journal entry to record issurance of common stock 2. on july 2025, intech repurchased 5000 shares of common stock for treasury for $18/share. prepare the journal entry 3. on october 15 2025. intech reissued 3000 shares at $16/share....
Saterwine Company began 2017 with 30,000 shares of stock issued. In March, Saterwine repurchased 1,000 of...
Saterwine Company began 2017 with 30,000 shares of stock issued. In March, Saterwine repurchased 1,000 of its own shares for $47 per share. In August, it reissued 300 shares of treasury stock for $50 per share. In December, it reissued the remaining 700 shares for $45 per share. a. Record the repurchase of 1,000 of its shares by Saterwine in March. b. Record the reissuance of 300 shares in August. c. Record the reissuance of 700 shares in December.
Overland Corporation is authorized to issue 250,000 shares of $1 par value common stock. During 2017,...
Overland Corporation is authorized to issue 250,000 shares of $1 par value common stock. During 2017, Overland Corporation took part in the following selected transactions. ? Issued 55,000 shares of stock at $76 per share, less costs related to the issuance of the stock totaling $27,000. ? Issued 10,000 shares of stock for land appraised at $815,000. The stock was actively traded on a national stock exchange at approximately $78 per share on the date of issuance. ? Purchased 6,000...
Ryuji Corporation is authorized to issue 53,000 shares of $5 par value common stock. During 2020,...
Ryuji Corporation is authorized to issue 53,000 shares of $5 par value common stock. During 2020, Blue took part in the following selected transactions. 1. Issued 5,100 shares of stock at $49 per share, less costs related to the issuance of the stock totaling $6,800. 2. Issued 1,100 shares of stock for land appraised at $53,000. The stock was actively traded on a national stock exchange at approximately $50 per share on the date of issuance. 3. Purchased 480 shares...
In late 20X2, the Pickins Corporation was formed. The articles of incorporation authorize 5,000,000 shares of...
In late 20X2, the Pickins Corporation was formed. The articles of incorporation authorize 5,000,000 shares of common stock carrying a $1 par value, and 1,000,000 shares of $5 par value preferred stock. On January 1, 20X3, 2,000,000 shares of common stock are issued for $15 share. Also on this date, 500,000 shares of preferred stock are issued at $30 per shares. Prepare journal entries to record the above issuance of common stock and preferred stock on January 1, 20X3 During...
On 1/1/2017, AB Company has 20000 shares of $5 par value common stock outstanding at an...
On 1/1/2017, AB Company has 20000 shares of $5 par value common stock outstanding at an average issue price of $41 per share. On June 1, the company acquired 1700 shares of its own outstanding common stock for $40 per share. The company uses the "cost method" to account for transactions involving the acquisition of its own shares and reissuance of such shares. On July 1, AB Company reissued 700 treasury shares for $43 per share. On November 1, AB...
Exercise 15-6 Flounder Corporation is authorized to issue 50,000 shares of $5 par value common stock....
Exercise 15-6 Flounder Corporation is authorized to issue 50,000 shares of $5 par value common stock. During 2017, Flounder took part in the following selected transactions. 1. Issued 4,600 shares of stock at $48 per share, less costs related to the issuance of the stock totaling $6,500. 2. Issued 1,000 shares of stock for land appraised at $50,000. The stock was actively traded on a national stock exchange at approximately $49 per share on the date of issuance. 3. Purchased...
E 11-4A. Treasury Stock Coastal Corporation issued 25,000 shares of $5 par value common stock at...
E 11-4A. Treasury Stock Coastal Corporation issued 25,000 shares of $5 par value common stock at $15 per share and 6,000 shares of $50 par value, eight percent preferred stock at $85 per share.  Later, the company purchased 3,000 shares of its own common stock at $20 per share. a. Prepare the journal entries to record the share issuances and the purchase of the common shares. b. Assume that Coastal sold 2,000 shares of the treasury stock at $25 per share.  Prepare...
On May 3, Zirbal Corporation purchased 6,000 shares of its own stock for $60,000 cash. On...
On May 3, Zirbal Corporation purchased 6,000 shares of its own stock for $60,000 cash. On November 4, Zirbal reissued 1,500 shares of this treasury stock for $16,500. Prepare the May 3 and November 4 journal entries to record Zirbal’s purchase and reissuance of treasury stock.
3)         Evert Company recently acquired 5,000 shares of its $2 par value common stock for $10...
3)         Evert Company recently acquired 5,000 shares of its $2 par value common stock for $10 per share. Evert initially issued the stock for $7.50 per share. Required: Assuming the shares were purchased as treasury shares, prepare the necessary journal entry to record the purchase of the 5,000 shares. Continuing with the assumption that the shares were purchased as treasury shares, prepare the journal entry to record the sale of 2,500 shares of the treasury stock for $11.50 per share....
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT