Question

Part B
During 2018, the Nicklaus Corporation participated in three treasury stock transactions:

On June 30, 2018, the corporation reacquires 160,000 shares for the treasury at a price of $12 per share.

On July 31, 2018, 30,000 treasury shares are reissued at $15 per share.

On September 30, 2018, 30,000 treasury shares are reissued at $10 per share.

Required:
1. Prepare journal entries to record these transactions.
2. Prepare the Nicklaus Corporation shareholders' equity section as it would appear in a balance sheet prepared at September 30, 2018. (Assume net income for the second and third quarter was $2,800,000.)

Answer 1

• All working forms part of the answer
• Working for Treasury Shares

Date	No. of treasury shares	Cost	Amount	Additional Paid In Capital
30-Jun-18	160000	$                 12.00	$         19,20,000.00
31-Jul-18	-30000	$                 12.00	$         (3,60,000.00)	$        90,000.00
30-Sep-18	-30000	$                 12.00	$         (3,60,000.00)	$      (60,000.00)
TOTAL for Balance Sheet	100000	$                 12.00	$         12,00,000.00	$        30,000.00

• Journal Entries

Date	General Journal	Debit	Credit
30-Jun-18	Treasury Stock	$   19,20,000.00
	Cash		$         19,20,000.00
31-Jul-18	Cash	$     4,50,000.00
	Treasury Stock		$            3,60,000.00
	Additional Paid In Capital		$               90,000.00
30-Sep-18	Cash	$     3,00,000.00
	Additional Paid In Capital	$         60,000.00
	Treasury Stock		$            3,60,000.00

• Stockholder’s Equity Section

Stockholder's Equity
Common Stock	XXX
Additional Paid In Capital	$         30,000.00
Retained Earnings	$   28,00,000.00
Total	$   28,30,000.00
Less: Treasury Stock	$   12,00,000.00
Total Stockholder's Equity	$   16,30,000.00