Question

Jimmy Joe's, Inc. had the following transactions for this year. Prepare journal entries for each transaction, post the transactions to T-accounts, and determine the ending balance of accounts needed to answer the questions. 1-Jan Jimmy Joe's, Inc. issued 6,000 shares of $3 par common stock for $20,000. 15-Mar Jimmy Joe's, Inc. purchased 5,000 shares of their own stock on the open market for $12 cash per share. 10-Jul Jimmy Joe's, Inc. re-issued 4,000 shares of treasury stock for $14 per share. 31-Oct Jimmy Joe's, Inc. re-issued 1,000 shares of treasury stock for $11 per share. a) What is the July 10 balance in the Treasury Stock-Common account, using the cost method?

Answer 1

Solution

Jimmy Joe Inc

Journal Entries –

Date	Account Titles and Explanation	Ref. No	Debit	Credit
1-Jan	Cash		$20,000
	Common Stock			$18,000
	Additional Paid in Capital in Excess of Par,			$2,000
	(To record issue of 6,000 common shares at $3 par and excess paid in capital 20,000 - (6,000 x $3) = $2,000)
15-Mar	Treasury Stock		$60,000
	Cash			$60,000
	(To record purchase of 5,000 shares of own stock at $12)
10-Jul	Cash		$56,000
	Treasury Stock			$48,000
	Paid-in Capital Treasury Stock			$8,000
	(To record re-issue of 4,000 treasury stock shares at $14 per share; paid in capital in excess of cost, $14 - $12 x 4,000 = $8,000)
31-Oct	Cash		$11,000
	Paid-in Capital Treasury Stock		$1,000
	Treasury Stock			$12,000
	(To record re-issue of 1,000 treasury stock shares at $11 per share; paid in capital in excess of cost, $12 - $11 x 1,000 = $1,000)

T- Accounts

Debit		Cash			Credit
Date	Description	Amount	Date	Description	Amount
1-Jan	Common Stock	$18,000	15-Mar	Treasury Stock	$60,000
1-Jan	Additional paid in Capital	$2,000
10-Jul	Treasury Stock	$48,000
10-Jul	Treasury Stock	$8,000	31-Dec	Balance c/f	$7,000
31-Oct	Treasury Stock	$11,000
		$67,000			$67,000
Debit		Treasury Stock			Credit
Date	Description	Amount	Date	Description	Amount
15-Mar	Cash	$60,000	10-Jul	Cash	$48,000
			31-Oct	Cash	$11,000
			31-Oct	Additional Paid-in Capital	$1,000
		$60,000			$60,000