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Joe Dumars Company has outstanding 40,000 shares of $5 par common stock which had been issued...

Exercise 15-7 Joe Dumars Company has outstanding 40,000 shares of $5 par common stock which had been issued at $30 per share. Joe Dumars then entered into the following transactions. 1. 2. 3. Purchased 5,000 treasury shares at $45 per share. Resold 2,000 of the treasury shares at $49 per share. Resold $40 per share. 500 of the treasury shares at Indicate the effect each of the three transactions has on the financial statement categories listed in the table below, assuming Joe Dumars Company uses the cost method. Stockholders Paid-in Retained Net # Assets Liabilities 1. 2. 3. Click if you would like to Show Work for this question: Equity Capia Earnings Income Open Show Work

Joe Dumars Company has outstanding 40,000 shares of $5 par common stock which had been issued at $30 per share. Joe Dumars then entered into the following transactions.  

.1. Purchased 5,000 treasury shares at $45 per share.  

2. Resold 2,000 of the treasury shares at $49 per share.  

3. Resold 500 of the treasury shares at $40 per share.  


Indicate the effect each of the three transactions has on the financial statement categories listed in the table below, assuming Joe Dumars Company uses the cost method.

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Expert Solution

Asset Liabilities Stockholders' equity paid in capital retained earnings Net income
1) Decrease by $2250000 No effect Decrease by $2250000 No effect No effect No effect
2) Increase by $98000 No effect Increase by $90000 Increase by $8000 No effect No effect
3) Increase by $20000 No effect increase by $22500 Decrease by $2500 No effect No effect
Journal Debit ($) Credit ($)
1) Treasury stock 2250000
Cash 2250000
2) Cash 98000
Treasury Stock 90000
Paid in capital - treasury stock 8000
3) Cash 20000
paid in capital 2500
Treasury Stock 22500

ekkarill92 answered 2 years ago
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