Question

SprayCo Inc. develops and produces spraying equipment for lawn maintenance and industrial uses. On March 9 of the current year, SprayCo reacquired 19,900 shares of its common stock at $19 per share. On June 9, 13,500 of the reacquired shares were sold at $24 per share, and on November 13, 5,100 of the reacquired shares were sold at $20.

Required:

	a. Journalize the transactions of March 9, June 9, and November 13. Refer to the Chart of Accounts for exact wording of account titles.
	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 1

• All working forms part of the answer
• Requirement ‘a’

Date	Accounts title	Debit	Credit	Working
09-Mar	Treasury Stock	$                      378,100		[19900 shares x $ 19]
	Cash		$                     378,100	[19900 shares x $ 19]
	(Shares re acquired)
09-Jun	Cash	$                      324,000		[13500 shares x $ 24]
	Treasury Stock		$                     256,500	[13500 shares x $ 19 cost]
	Paid in Capital from sale of Treasury Stock		$                        67,500	[13500 shares x $ 6]
	(Shares re issued)
13-Nov	Cash	$                      102,000		[5100 shares x $ 20]
	Treasury Stock		$                        96,900	[5100 shares x $ 19 cost]
	Paid in Capital from sale of Treasury Stock		$                          5,100	[5100 shares x $ 1]
	(Shares re issued)

• Requirement ‘b’

Balance in Paid in Capital from Sale of Treasury Stock:
09-Jun	$                        67,500
13-Nov	$                          5,100
Total Balance on 31 Dec	$                        72,600 = Answer

• Requirement ‘c’

Balance in Treasury Stock account:
09-Mar	$                      378,100
09-Jun	$                   (256,500)
13-Nov	$                      (96,900)
Total balance on Dec 31	$                        24,700 = Answer

• Requirement ‘d’

Balance of Treasury Stock is DEDUCTED under Total Stockholder’s Equity section:

Balance Sheet - Partial
Stockholder's Equity
Paid in Capital	XXX
Retained earnings	XXX
Total	XXX
Less: Treasury Stock	$                        24,700
Total Stockholder's Equity	XXX