Reference no: EM132772585
Treasury Stock: Par Value and Cost Methods
The stockholders' equity of Thomas Company as of December 31, 2012, was as follows:
Common stock, $1 par, authorized 275,000 shares;
240,000 shares issued and outstanding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 240,000
Paid-in capital in excess of par. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,840,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900,000
On June 1, 2013, Thomas reacquired 15,000 shares of its common stock at $16. The following transactions occurred in 2013 with regard to these shares.
July 1, Sold 5,000 shares at $20.
Aug. 1, Sold 7,000 shares at $14.
Sept. 1, Retired 1,000 shares.
Problem 1. Using the cost method to account for treasury stock:
(a) Prepare the journal entries to record all treasury stock transactions in 2013.
(b) Prepare the Stockholders' Equity section of the balance sheet at December 31, 2013, assuming Retained Earnings of $1,005,000 (before the effects of treasury stock transactions).
Problem 2. Using the par value method to account for treasury stock:
(a) Prepare the journal entries to record all treasury stock transactions in 2013.
(b) Prepare the Stockholders' Equity section of the balance sheet at December 31, 2013, assuming Retained Earnings of $1,005,000 (before the effects of treasury stock transactions).