On January 1, Lorain Corporation had 2,000 shares of $5 par common stock authorized and outstanding. These shares were originally issued at a price of $26 per share. In addition, 500 shares of $50 par preferred stock were outstanding. These were issued at a price of $75 per share. During the year, the following stock transactions occurred:1.March 3: Lorain reacquired 100 shares of its own common stock at a cost of $24 per share.2.April 27: It sold 25 shares of the common stock acquired on March 3 for $33 per share.3.July 10: It sold 25 shares of the common stock acquired on March 3 for $22 per share.4.October 12: It retired the remaining shares acquired on March 3. Required: Prepare journal entries to record the treasury stock transactions of Lorain, assuming it uses the cost method.

Treasury stock: Treaseury stock are the shares which are bought back by the company from the open…

Answered: On January 1, Lorain Corporation had…

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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On January 1, Lorain Corporation had 2,000 shares of $5 par common stock authorized and outstanding. These shares were originally issued at a price of $26 per share. In addition, 500 shares of $50 par preferred stock were outstanding. These were issued at a price of $75 per share. During the year, the following stock transactions occurred:

1.	March 3: Lorain reacquired 100 shares of its own common stock at a cost of $24 per share.
2.	April 27: It sold 25 shares of the common stock acquired on March 3 for $33 per share.
3.	July 10: It sold 25 shares of the common stock acquired on March 3 for $22 per share.
4.	October 12: It retired the remaining shares acquired on March 3.

Required:

Prepare journal entries to record the treasury stock transactions of Lorain, assuming it uses the cost method.

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