Question

Water Inc. reacquired 26,550 shares of its common stock

The stock outstanding when a corporation has issued only one class of stock.

at $67 per share. On September 6, Biscayne Bay Water Inc. sold 12,750 of the reacquired shares at $73 per share. The remaining 13,800 shares were sold at $64 per share on November 30.

Required:

A.	Journalize the transactions of May 14, September 6, and November 30. Refer to the Chart of Accounts for exact wording of account titles.
B.	What is the balance in Paid-In Capital Capital contributed to a corporation by the stockholders and others. from Sale of Treasury Stock on December 31 of the current year?
C.	Where will the balance in Paid-In Capital from Sale of Treasury Stock be reported on the balance sheet?
D.	For what reasons might Biscayne Bay Water Inc. have purchased the treasury stock?
CHART OF ACCOUNTS Biscayne Bay Water Inc. General Ledger   ASSETS 110 Cash 120 Accounts Receivable 131 Notes Receivable 132 Interest Receivable 141 Merchandise Inventory 145 Office Supplies 151 Prepaid Insurance 181 Land 193 Equipment 194 Accumulated Depreciation-Equipment     LIABILITIES 210 Accounts Payable 221 Notes Payable 226 Interest Payable 231 Cash Dividends Payable 236 Stock Dividends Distributable 241 Salaries Payable 261 Mortgage Note Payable     EQUITY 311 Common Stock 312 Paid-In Capital in Excess of Par-Common Stock 315 Treasury Stock 321 Preferred Stock 322 Paid-In Capital in Excess of Par-Preferred Stock 331 Paid-In Capital from Sale of Treasury Stock 340 Retained Earnings 351 Cash Dividends 352 Stock Dividends 390 Income Summary   A. Journalize the transactions of May 14, September 6, and November 30. Refer to the Chart of Accounts for exact wording of account titles. PAGE 10 JOURNAL   DATE DESCRIPTION POST. REF. DEBIT CREDIT 1           2           3           4           5           6           7           8           Solution   DATE DESCRIPTION POST. REF. DEBIT CREDIT 1           2           3           4           5           6           7           8           Final Questions B. What is the balance in Paid-In Capital Capital contributed to a corporation by the stockholders and others. from Sale of Treasury Stock on December 31 of the current year?selector 1 Credit Debit C. Where will the balance in Paid-In Capital from Sale of Treasury Stock be reported on the balance sheet? selector 1 Liabilities section Stockholder\'s Equity section Assets section Not reported on the balance sheet D. For what reasons might Biscayne Bay Water Inc. have purchased the treasury stock? Check all that apply. To support the market price of the stock. The company wishes to increase the par value of its stock. For reissuance to employees as a bonus according to stock purchase agreements. The company wishes to receive more of its own dividends. To provide shares for resale to employees.

Answer 1

A. Journal entries

may 14

Treasury stock $1,778,850

Cash (26,550*67) $1,778,850

Sept 6

Cash (12,750 * 73) $930,750
Paid in capital from sale of treasury stock $76,500 (12,750 * 6)
Treasury stock $854,250 (12,750 * 67)

Nov 30

cash (13,800 * 64) $883,200
paid in capital from sale of treasury stock $41,400(13,800 * 3)
Treasury stock $924,600

B. Paid in capital from sale of treasury stock = $76,500 - $41,400 = $35,100 credit balance

C. Paid in capital from sale of treasury stock is recorded in stockholders equity section

D. To support the market price of the stock

The company wishes to receive more of its own dividends.

 $924,600