Question

P5. The following information pertains to stock transactions of Hawk, Inc. during 2019.

On 1/11/2019, Hawk issued 1,000,000 shares of common stock for $115/share. Its par is $100/share.

On 7/1/2019, Hawk reacquired 200,000 shares of its common stock at $96/share.

On 7/15/2019, Hawk reacquired 100,000 shares of its common stock at $94/share.

On 9/1/2019, Hawk sold 110,000 shares of the treasury stock for $105/share.

On 11/1/2019, Hawk sold 160,000 shares of the stock reacquired for $90/share.

On 12/31/2019, Hawk retired the remaining 30,000 shares of the stock reacquired.

Instructions: Prepare any necessary journal entries for the above transactions using the LIFO flow

assumption and

• the cost method
• the par value method

Answer 1

Solution:
	Journal Entries
	Sr. No.	Date	Account Title and explanation	Debit	Credit
	1	1/11/2019	Cash	$11,50,00,000
			Common Stock		$10,00,00,000
			Paid in Capital in Excess of Par - Common Stock		$1,50,00,000
			(To Record the issue of Common Stock)
	2	7/1/2019	Treasurry stock (200,000 Shares X $ 96)	$1,92,00,000
			Cash		$1,92,00,000
			(To Record the purchase of treasurry Stock)
	3	7/15/2019	Treasurry stock (100,000 Shares X $ 94)	$94,00,000
			Cash		$94,00,000
			(To Record the purchase of treasurry Stock)
	4	9/1/2019	Cash (110,000 Shares X $ 105)	$1,15,50,000
			Addittional Paid in Capital - Treasurry Stock (Balance)		$11,90,000
			Treasurry Stock (100,000 Shares X $ 94) + (10000 Shares X $ 96)		$1,03,60,000
			(To record the resold of treasury stock)
	5	11/1/2019	Cash (160,000 Shares X $ 90)	$1,44,00,000
			Addittional Paid in Capital - Treasurry Stock (Balance)	$9,60,000
			Treasurry Stock (160,000 Shares X $ 96)		$1,53,60,000
			(To record the resold of treasury stock)
	6	12/31/2019	Share Capital (30,000 Shares X $ 100)	$30,00,000
			Treasurry Stock (30,000 X $ 96)		$28,80,000
			Addittional Paid in Capital - Common Stock		$1,20,000
			(To record the retire of treasury Stock)