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In: Accounting

Part B During 2018, the Nicklaus Corporation participated in three treasury stock transactions: On June 30,...


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.)

Solutions

Expert Solution

  • 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

ekkarill92 answered 2 years ago
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