EX 13-12 Treasury stock transactions

Golden Gardens Inc. develops and produces spraying equipment for lawn maintenance and industrial uses. On June 19 of the current year, Golden Gardens Inc. reacquired 24,000 shares of its common stock at $64 per share. On August 30, 19,000 of the reacquired shares were sold at $68 per share, and on September 6, 3,000 of the reacquired shares were sold at $70.

a. Journalize the transactions of June 19, August 30, and September 6.

b. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year?

c. What is the balance in Treasury Stock on December 31 of the current year?

d. How will the balance in Treasury Stock be reported on the balance sheet?


Answer:

a. June 19 Treasury Stock (24,000 × $64)..................... 1,536,000
 Cash......................................................... 1,536,000
 Aug. 30 Cash (19,000 × $68)...................................... 1,292,000
 Treasury Stock (19,000 × $64)................ 1,216,000
 Paid-In Capital from Sale
 of Treasury Stock .............................. 76,000
 Sept. 6 Cash (3,000 × $70)........................................ 210,000
 Treasury Stock (3,000 × $64).................. 192,000
 Paid-In Capital from Sale
 of Treasury Stock .............................. 18,000
b. $94,000 ($76,000 + $18,000) credit
c. $128,000 (2,000 × $64) debit
d. The balance in the treasury stock account is reported as a deduction from the
total of the paid-in capital and retained earnings. 

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