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Question 9 Windsor Company's balance sheet shows: Common stock, $20 par $3,200,000 Paid-in capital in excess...

Question 9

Windsor Company's balance sheet shows:
Common stock, $20 par $3,200,000
Paid-in capital in excess of par 1,080,000
Retained earnings 780,000

Record the following transactions by the cost method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
(a) Bought 8,000 shares of its common stock at $40 a share.
(b) Sold 4,100 treasury shares at $41 a share.
(c) Sold 1,900 shares of treasury stock at $36 a share.

No.

Account Titles and Explanation

Debit

Credit

(a)

(b)

(c)

SHOW LIST OF ACCOUNTS

Solutions

Expert Solution

Journal Entries-

No. Account Titles and Explanation Debit Credit
(a)   Treasury stock (8000*$40) $320,000
Cash $320,000
(To record purchase of treasury stock)
(b)   Cash (4100*$41) $168,100
Treasury stock    (4100*$40) $164,000
Paid in capital from sale of treasury stock (4100*$1) $4,100
(To record Sale of treasury stock)
(c ) Cash (1900*$36) $68,400
Paid in capital from sale of treasury stock    $4,100
Retained earnings $ 3,500
Treasury stock (1900*$40) $76,000
(To record Sale of treasury stock)

Note-The gain on sale of treasury stock is credited to "Paid in capital from the sale of treasury stock account". This balance is used to setoff loss if any on loss on the sale of treasury stock. If the loss on the sale of treasury stock is more than the current balance in Paid-in capital from the sale of treasury stock account then the remaining loss is debited to retained earnings.

List of Accounts-

Account Title Type of Account
1. Cash Current Assets
2. Paid-In Capital Shareholders Equity
3. Retained Earnings Shareholders Equity
4. Treasury Stock Shareholders Equity

Please write your doubts in comment section iif any.

Thanks & all the best....

ekkarill92 answered 2 years ago
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