The par value method and constructive retirement method

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Reference no: EM131247514

When stock of the company is purchased, treasury stock, three methods are available to record this transaction: the cost method, the par value method, and the constructive retirement method. Discuss the following:

1) The difference between the cost, par and constructive retirement method.

2) For the cost and par value methods, prepare journal entry examples of each using the following information:

a) 1000 shares of $5 par stock were sold for $7.

b) 500 shares were repurchased at a price of $6

c) The 500 shares were later sold for $3500

3) For the constructive retirement method prepare the following journal entry:

a) The shares were retired.

Reference no: EM131247514

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