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Before Splish Corporation engages in the treasury stock transactions listed below, its general ledger reflects, among others,...

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Accounting

Before Splish Corporation engages in the treasury stocktransactions listed below, its general ledger reflects, amongothers, the following account balances (par value of its stock is$30 per share).

Paid-in Capital in Excess of Par—CommonStock

Common Stock

Retained Earnings

$106,500

$259,500

$80,000


Record the treasury stock transactions (given below) under the costmethod of handling treasury stock; use the FIFO method forpurchase-sale purposes. (Credit account titles areautomatically indented when amount is entered. Do not indentmanually. If no entry is required, select "No Entry" for theaccount titles and enter 0 for theamounts.)

(a)Bought 390 shares of treasurystock at $40 per share.
(b)Bought 310 shares of treasurystock at $44 per share.
(c)Sold 340 shares of treasurystock at $42 per share.
(d)Sold 110 shares of treasurystock at $38 per share.

please explain detail

Answer & Explanation Solved by verified expert
3.7 Ratings (379 Votes)

Solution:

Journal Entries - Before Splish Corporation
Event Particulars Debit Credit
a Treasury Stock Dr (390*$40) $15,600.00
      To Cash $15,600.00
(To record purchase of treasury stock)
b Treasury Stock Dr (310*$44) $13,640.00
      To Cash $13,640.00
(To record purchase of treasury stock)
c Cash Dr (340*$42) $14,280.00
      To Treasury Stock (340*$40) $13,600.00
      To Paid in capital from treasury stock $680.00
(To record sale of treasury stock)
d Cash Dr (110*$38) $4,180.00
Paid in capital from treasury stock Dr $460.00
      To Treasury stock (50*$40 + 60*$44) $4,640.00
(To record sale of treasury stock)

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