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

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Accounting

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

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

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

  1. During February 2015, Todd purchased 200,000 shares of itscommon stock and paid $10 per share. This was Todd’s first purchaseof treasury stock.
  2. During April 2015, Todd sold 100,000 of the treasury shares for$9.50 per share.
  3. During May 2015, Todd sold 50,000 of the treasury shares for$10.25 per share.
  4. During July 2015, Todd purchased another 50,000 shares of itscommon stock and paid $9.95 per share.
  5. During August 2015, Todd sold 80,000 of the treasury shares for$10.50 per share.
  6. During September 2015, Todd purchased another 10,000 shares ofits common stock and paid $11 per share.
  7. During December 2015, Todd sold 15,000 of the treasury sharesfor $15 per share.

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

Answer & Explanation Solved by verified expert
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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 (50000*10+30000*9.95) 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)

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