This is an intermediate accounting question about Stockholder's Equity. (Chp15) Todd's 12-31-14 balance sheet reported: ...

This is an intermediate accounting question about Stockholder's Equity. (Chp15)

Todd's 12-31-14 balance sheet reported:

Common stock outstanding: 600,000 shares, par $1 per share $600,000

Paid-in capital in excess of par value 2,400,000

Retained earnings 30,000,000

The following transactions occurred this year:

During February 2015, Todd purchased 200,000 shares of its common stock and paid $10 per share. This was Todd’s first purchase of treasury stock.
During April 2015, Todd sold 100,000 of the treasury shares for $9.50 per share.
During May 2015, Todd sold 50,000 of the treasury shares for $10.25 per share.
During July 2015, Todd purchased another 50,000 shares of its common stock and paid $9.95 per share.
During August 2015, Todd sold 80,000 of the treasury shares for $10.50 per share.
During September 2015, Todd purchased another 10,000 shares of its common stock and paid $11 per share.
During December 2015, Todd sold 15,000 of the treasury shares for $15 per share.

Assume Todd uses a FIFO method to account for cost of treasury shares it reissues. Prepare the entry for each of these transactions under the cost method of accounting for treasury stock.

Expert Solution

Journal entry

Date	account and explanation	debit	credit
Feb 2015	Treasury Stock (200000*10)	2000000
	Cash		2000000
	(To record treasury stock)

Apr 2015	Cash (100000*9.5)	950000
	Retained earnings	50000
	Treasury stock		1000000
	(to record sale of treasury stock)

May 2015	Cash (50000*10.25)	512500
	Treasury stock (50000*10)		500000
	Paid in capital from sale of treasury stock		12500
	(To record sale of treasury stock)

July 2015	Treasury Stock (50000*9.95)	497500
	Cash		497500
	(To record purchase treasury stock)

Aug 2015	Cash (80000*10.5)	840000
	Treasury stock (5000010+300009.95)		798500
	Paid in capital from sale of treasury stock		41500
	(To record sale of treasury stock)

Sep 2015	Treasury stock (10000*11)	110000
	Cash		110000
	(To record purchase treasury stock)

Dec 2015	Cash (15000*15)	225000
	Treasury Stock (15000*9.95)		149250
	Paid in capital from sale of treasury stock		75750
	(To record sale of treasury stock)

ekkarill92 answered 1 year ago

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