Asked by Andreas Frånlund on Jun 16, 2024
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Evert Company recently acquired 5,000 shares of its $2 par value common stock for $10 per share.Evert initially issued the stock for $7.50 per share.
Required:
1.Assuming the shares were purchased as treasury shares,prepare the necessary journal entry to record the purchase of the 5,000 shares.
2.Continuing with the assumption that the shares were purchased as treasury shares,prepare the journal entry to record the sale of 2,500 shares of the treasury stock for $11.50 per share.
3.Continuing with the assumption that the shares were purchased as treasury shares,prepare the journal entry to record the subsequent sale of 2,000 shares of treasury stock for $9.75 per share.
4.Assuming the shares were purchased and retired,prepare the journal entry to record the retirement of the shares.
Treasury Shares
Stock that has been bought back by the issuing company, reducing the amount of outstanding stock on the open market.
Par Value
Par value is a nominal value assigned to a security or stock as stated in its corporate charter, often used to determine legal capital or face value.
Journal Entry
A record in accounting that represents a transaction and its effect on accounts.
- Recognize the effect of stock transactions and treasury stock activities on financial statements.
Verified Answer
SS
Learning Objectives
- Recognize the effect of stock transactions and treasury stock activities on financial statements.