Question

Entries for Treasury Stock

On May 27, Mama Mia Inc. reacquired 7,700 shares of its common stock at $39 per share. On August 3, Mama Mia sold 3,500 of the reacquired shares at $42 per share. November 14, Mama Mia sold the remaining shares at $38 per share.

Journalize the transactions of May 27, August 3, and November 14. For a compound transaction, if an amount box does not require an entry, leave it blank.

May 27	Treasury Stock
	Cash
Aug. 3	Cash
	Treasury Stock
	Paid-In Capital from Sale of Treasury Stock
Nov. 14	Cash
	Paid-In Capital from Sale of Treasury Stock
	Treasury Stock

Reporting Stockholders' Equity

Using the following accounts and balances, prepare the Stockholders' Equity section of the balance sheet using Method 1 of Exhibit 8. 50,000 shares of common stock authorized, and 2,000 shares have been reacquired.

Common Stock, $30 par	$900,000
Paid-In Capital from Sale of Treasury Stock	45,000
Paid-In Capital in Excess of Par—Common Stock	300,000
Retained Earnings	432,000
Treasury Stock	21,000

Stockholders' Equity
Paid-In Capital:
	$
		$
Total Paid-in Capital		$
Total		$
Total Stockholders' Equity		$

Answer 1

1) Journal entry :

Date	account and explanation	debit	credit
May 27	Treasury stock (7700*39)	300300
	Cash		300300
	(To record treasury stock purchased)
Aug 3	Cash (3500*42)	147000
	Treasury Stock (3500*39)		136500
	Paid-In Capital from Sale of Treasury Stock		10500
	(To record treasury Stock sold)
Nov 14	Cash (4200*38)	159600
	Paid-In Capital from Sale of Treasury Stock	4200
	Treasury Stock (4200*39)		163800
	(To record treasury Stock sold)

2) Reporting

Paid in capital
Common Stock	900000
Paid-In Capital in Excess of Par—Common Stock	300000
Paid-In Capital from Sale of Treasury Stock	45000
Total Paid in capital		1245000
Retained earnings		432000
Total		1677000
Less: Treasury Stock		-21000
Total Stockholders' Equity		1656000