1. Explanation Treasury Stock: The shares of a corporation which are bought back from the shareholders for cash but are not formally retired are referred to as treasury stock. Cost method: Under this method, at the time of reacquiring the treasury stock, it will be debited for the amount paid. At the time of reissuance, treasury stock will be credited and cash will be debited with the proceeds received. Credit the additional paid-in capital for the difference amount. Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system. Rules of Debit and Credit: Following rules are followed for debiting and crediting different accounts while they occur in business transactions: Debit , all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities . Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses. Prepare the journal entries to record the treasury stock transaction under cost method: Date Account Titles and Explanation Post Ref. Debit ($) Credit ($) 1 Treasury Stock: Preferred 11,400 Cash ( 200 × $ 57 ) 11,400 (To record reacquisition of preferred stock) 2 Treasury Stock: Common 8,000 Cash ( 500 × $ 16 ) 8,000 (To record reacquisition of common stock) 3 Cash ( 100 × $ 58 ) 5,800 Treasury Stock: Preferred ( 100 × $ 57 ) 5,700 Additional Paid-in Capital from Treasury Stock: Preferred 100 (To record sale of treasury stock) 2. To determine Prepare the shareholders’ equity part of its balance sheet as on December 31, 2016

Intermediate Accounting: Reporting and Analysis, 2017 Update

2nd Edition

ISBN: 9781337116619

Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher: Cengage Learning

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Chapter 15, Problem 16P

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Prepare the journal entries to record the treasury stock transaction under cost method.

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Prepare the shareholders’ equity part of its balance sheet as on December 31, 2016

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Intermediate Accounting: Reporting and Analysis, 2017 Update

Ch. 15 - Prob. 1GI Ch. 15 - Prob. 2GI Ch. 15 - What are the three components and the basic...Ch. 15 - List the various rights of a shareholder. Which do...Ch. 15 - What is the meaning of the following terms: (a)...Ch. 15 - Prob. 6GI Ch. 15 - Prob. 7GI Ch. 15 - How does preferred stock differ from common stock?Ch. 15 - What amount of the proceeds from the issuance of...Ch. 15 - Prob. 10GI

Ch. 15 - Prob. 11GI Ch. 15 - Prob. 12GI Ch. 15 - Prob. 13GI Ch. 15 - Prob. 14GI Ch. 15 - Prob. 15GI Ch. 15 - Prob. 16GI Ch. 15 - Prob. 17GI Ch. 15 - Prob. 18GI Ch. 15 - Prob. 19GI Ch. 15 - How is a preferred stock similar to a long-term...Ch. 15 - Prob. 21GI Ch. 15 - Prob. 22GI Ch. 15 - Prob. 23GI Ch. 15 - Prob. 24GI Ch. 15 - Prob. 25GI Ch. 15 - What additional disclosures about preferred and...Ch. 15 - Prob. 1MC Ch. 15 - Prob. 2MC Ch. 15 - What is the most likely effect of a stock split on...Ch. 15 - Prob. 4MC Ch. 15 - Prob. 5MC Ch. 15 - Prob. 6MC Ch. 15 - Prob. 7MC Ch. 15 - When treasury stock is purchased for cash at more...Ch. 15 - Preferred stock that may be retired by the...Ch. 15 - When treasury stock accounted for by the cost...Ch. 15 - Brown Corporation issues 800 shares of its 5 par...Ch. 15 - Heart Corporation entered into a subscription...Ch. 15 - Blue Corporation issues 200 packages of securities...Ch. 15 - Sun Corporation issues 500 shares of 8 par common...Ch. 15 - Next Level Morgan Corporation issues 500 packages...Ch. 15 - Prob. 6RE Ch. 15 - Prob. 7RE Ch. 15 - Prob. 8RE Ch. 15 - Prob. 9RE Ch. 15 - Assume Cole Corporation originally issued 300...Ch. 15 - Violet Corporation issues 1,200 shares of 150 par...Ch. 15 - Assume that Lily Corporation has outstanding 1,500...Ch. 15 - Tulip Corporation uses the cost method to account...Ch. 15 - Par Value and No-Par Stock Issuance Caswell...Ch. 15 - Combined Sale of Stock Maxville Company issues 300...Ch. 15 - Sale of Stock with Bonds Pilsen Company issues 12%...Ch. 15 - Issuance of Stock for Land Putt Company issues 500...Ch. 15 - Prob. 5E Ch. 15 - Prob. 6E Ch. 15 - Prob. 7E Ch. 15 - Prob. 8E Ch. 15 - Prob. 9E Ch. 15 - Prob. 10E Ch. 15 - Prob. 11E Ch. 15 - Prob. 12E Ch. 15 - Stock Rights with Preferred Stock Nelson...Ch. 15 - Various Journal Entries Lodi Company is authorized...Ch. 15 - Treasury Stock, Cost Method On January 1, Lorain...Ch. 15 - Prob. 16E Ch. 15 - Treasury Stock, Cost Method (and IFRS Revaluation)...Ch. 15 - Treasury Stock, Cost and Par Value Methods On...Ch. 15 - Treasury Stock, No Par Propst-Steele Production...Ch. 15 - Prob. 1P Ch. 15 - Prob. 2P Ch. 15 - Prob. 3P Ch. 15 - Prob. 4P Ch. 15 - Prob. 5P Ch. 15 - Prob. 6P Ch. 15 - Issuances of Stock Cada Corporation is authorized...Ch. 15 - Issuances of Stock Epple Corporation is authorized...Ch. 15 - Prob. 9P Ch. 15 - Comprehensive The shareholders equity section of...Ch. 15 - Prob. 11P Ch. 15 - Comprehensive Byrd Companys Contributed Capital...Ch. 15 - Prob. 13P Ch. 15 - Prob. 14P Ch. 15 - Reconstruct Journal Entries At the end of its...Ch. 15 - Prob. 16P Ch. 15 - Prob. 17P Ch. 15 - Prob. 1C Ch. 15 - Prob. 2C Ch. 15 - Prob. 3C Ch. 15 - Capital Stock Capital stock is an important area...Ch. 15 - Treasury Stock A corporation sometimes engages in...Ch. 15 - Prob. 6C Ch. 15 - Prob. 7C Ch. 15 - Compensatory Share Option Plan Tom Twitlet,...Ch. 15 - Prob. 9C Ch. 15 - Treasury Stock For numerous reasons, a corporation...Ch. 15 - Prob. 11C Ch. 15 - Prob. 12C Ch. 15 - Prob. 13C Ch. 15 - Prob. 14C

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Prepare the journal entries to record the treasury stock transaction under cost method.

Prepare the shareholders’ equity part of its balance sheet as on December 31, 2016

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