Shelton Corp. was involved in the following transactions. Jan.1 Issued 100000 shares of common stock, $2...

Shelton Corp. was involved in the following transactions.

Jan.1 Issued 100000 shares of common stock, $2 par, for $12

Mar.1 Reacquired 20000 shares at $30.

July 1 Reissued 14000 shares at $40.

Sept.1 Reissued 5000 shares at $32.

Dec.1 Retired the remaining treasury stock shares.

Required. Prepare the required journal entries under both the par value and cost methods. Prepare the entries for all the par value transactions, then prepare all the cost method transactions.

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Expert Solution

	Cash Method

Date	Accounts Name	Debit	Credit


jan 1	Cash	1200000
	Common Stock ( 100000 * 2 )		200000
	Additional paid in Capital		1000000
	( to record the issue of Common Stock )


mar 1	trasuty stock ( 20000 * 30 )	600000
	Cash		600000
	( to record the shares repurchased @ $30 PER share )


july 1	Cash ( 14000 * 40 )	560000
	Additional Paid in Capital - treasury Stock ( 14000 * ( 40-30) )		140000
	treasury Stock ( 14000 * 30)		420000



Sep 1	Cash (5000* 32)	160000
	additional paid in capital - treasury stock ( 5000*(32 - 30) )		10000
	treaury Stock ( 5000 * 30)		150000

	Retirement of ( 20000 – 14000-5000) 1000 Shares

Dec 1	Common Stock ( 1000 * parvalue (2) )	2000
	Additional Paid in Capital - treasury Stock ( 1000 * ( 30-2) )	28000
	Treasury Stock ( 1000 * 30)		30000

	par value method


Date	Accounts Name	Debit	Credit


jan	Cash	1200000
	Common Stock ( 100000 * 2 )		200000
	Additional paid in Capital		1000000
	( to record the issue of Common Stock )


	trasuty stock ( 20000 * 2 )	40000
	Additional paid in Capital	560000
	Cash		600000
	( to record the shares repurchased @ $30 PER share )


	Cash ( 14000 * 40 )	560000
	Additional Paid in Capital - treasury Stock ( 14000 * ( 40-2) )		532000
	treasury Stock ( 14000 * 2)		28000



	Cash (5000* 32)	160000
	additional paid in capital - treasury stock ( 5000*(32 – 2) )		150000
	treaury Stock ( 5000 * 2)		10000

	Retirement of ( 20000 – 14000-5000) 1000 Shares

	Common Stock ( 1000 * parvalue (2) )	2000
	Treasury Stock ( 1000 * 2)		2000

ekkarill92 answered 1 year ago

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