Question

20. On January 1, 2019, the stockholders’ equity section of Nance Corporation shows: Common stock ($5 par value) $1,500,000; Paid-in capital in excess of par value - common stock $1,000,000; and retained earnings $1,200,000. During the year, the following treasury stock transactions occurred.

Mar.     1   Purchased 30,000 shares for cash at $22 per share.

July      1   Sold 6,000 treasury shares for cash at $27 per share.

Sept.    1   Sold 5,000 treasury shares for cash at $19 per share.

Nov.    1   Sold 4,000 treasury shares for cash at $12 per share.

Journalize the treasury stock transactions during the year.

March 1:

July 1:

September 1:

November 1:

21. On October 1, Benji’s Bicycle Store had an inventory of 20 bicycles at a cost of $200 each. During the month of October, the following transactions occurred.

Oct.   4      Purchased 40 bicycles on account at a cost of $200 each from Monroe Bicycle Company, terms 1/10, n/30.

          6      Sold 25 bicycles to Team Wisconsin on account for $330 each, terms 2/10, n/30. The bicycles cost $200 each.

          7      Received $400 credit from Monroe Bicycle Company for the return of 2 defective bicycles.

        13      Granted $330 credit to Team Wisconsin for the return of a defective bicycle costing $200.

        14      Paid Monroe Bicycle Company in full, less discount.

Prepare the journal entries to record the transactions listed above for Benji’s Bicycle Store assuming it uses a perpetual inventory system.

22. The December 31, 2018 balance sheet of Barone Company had Accounts Receivable of $400,000 and a credit balance in Allowance for Doubtful Accounts of $32,000. During 2019, the following transactions occurred: sales on account, $1,500,000; sales returns and allowances, $50,000; collections from customers, $1,250,000; accounts written off, $36,000; previously written off accounts of $6,000 were collected.

(a)   Journalize the 2019 transactions listed above.

(b)   Prepare the journal entry to record bad debt expense for 2019 assuming that the company estimates that 8% of the ending balance in accounts receivable at December 31, 2019, will become uncollectible.

Answer 1

Date	Account	Debit	Credit
Mar 1	Treasury stock	660000
	Cash		660000
	(30000*22)
July 1	Cash (6000*27)	162000
	Paid in capital in excess of par - Treasury stock		30000
	Treasury stock (6000*22)		132,000
Sep 1	Cash (5000*19)	95000
	Paid in capital in excess of par - Treasury stock	15000
	Treasury stock (5000*22)		110000
1 Nov	cash (4000*12)	48000
	Paid in capital in excess of par - Treasury stock	40000
	Treasury stock (4000*22)		88000

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