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. CHART OF ACCOUNTSForza CorporationGeneral Ledger ASSETS 111 Cash 121 Accounts Receivable 141 Land 152 Prepaid Insurance 181 Equipment 198 Accumulated Depreciation LIABILITIES 211 Accounts Payable 231 Salaries Payable 250 Unearned Revenue 261 Income Taxes Payable EQUITY 305 Treasury Stock 311 Common Stock 317 Additional Paid-in Capital on Common Stock 318 Additional Paid-in Capital from Treasury Stock 331 Retained Earnings REVENUE 411 Sales Revenue EXPENSES 500 Cost of Goods Sold 511 Insurance Expense 512 Utilities Expense 521 Salaries Expense 532 Bad Debt Expense 540 Interest Expense 541 Depreciation Expense 559 Miscellaneous Expense 910 Income Tax Expense

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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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.

CHART OF ACCOUNTSForza CorporationGeneral Ledger

	ASSETS
111	Cash
121	Accounts Receivable
141	Land
152	Prepaid Insurance
181	Equipment
198	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
231	Salaries Payable
250	Unearned Revenue
261	Income Taxes Payable

	EQUITY
305	Treasury Stock
311	Common Stock
317	Additional Paid-in Capital on Common Stock
318	Additional Paid-in Capital from Treasury Stock
331	Retained Earnings

	REVENUE
411	Sales Revenue

	EXPENSES
500	Cost of Goods Sold
511	Insurance Expense
512	Utilities Expense
521	Salaries Expense
532	Bad Debt Expense
540	Interest Expense
541	Depreciation Expense
559	Miscellaneous Expense
910	Income Tax Expense

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