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Required: Prepare the journal entries for the stock transactions, using the cost method assumption to account for the treasury stock.

Required: Prepare the journal entries for the stock transactions, using the cost method assumption to account for the treasury stock.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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7. The following information is provided from the Forza Corporation's accounting records. 1) Issued 2,500 shares of $1 par common stock at $23 a share. 2) Issued 7,500 shares of $1 par common stock in exchange for land valued at $65,000. 3) In order to prevent a hostile takeover the company reacquired the 7,500 shares for $20 per share as treasury stock. 4) The hostile takeover did not succeed, and the company reissued 5,500 of the treasury shares of $21 per share. 5) The remaining treasury shares were reissued for $22 per share and an additional 2,000 shares were issued at the same price. Required: Prepare the journal entries for the stock transactions, using the cost method assumption to account for the treasury stock.
Transcribed Image Text:7. The following information is provided from the Forza Corporation's accounting records. 1) Issued 2,500 shares of $1 par common stock at $23 a share. 2) Issued 7,500 shares of $1 par common stock in exchange for land valued at $65,000. 3) In order to prevent a hostile takeover the company reacquired the 7,500 shares for $20 per share as treasury stock. 4) The hostile takeover did not succeed, and the company reissued 5,500 of the treasury shares of $21 per share. 5) The remaining treasury shares were reissued for $22 per share and an additional 2,000 shares were issued at the same price. Required: Prepare the journal entries for the stock transactions, using the cost method assumption to account for the treasury stock.
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