Prepare the journal entries for the purchase and sales of treasury stock as well as other...
Prepare the journal entries for the purchase and sales of treasury stock as well as other stock transactions. The company has 100,000 ordinary shares outstanding.
- Issued 3,500 €2.50 par value ordinary shares to CEO as annual bonus in lieu of compensation. Share had a fair market value of €100 per share.
- Purchased 10,000 of its previously issued shares for €125 per share.
- It issued 5,600 of the treasury stock in #2 in lieu of compensation to its long-time employees. The shares had a fair market value of $132 per share.
- Issued 2000 €125 par value preference shares for cash at €175 per share.
- Sold 3,000 of the treasury stock for €366,000.
- Declared a cash dividend om the outstanding balance of ordinary shares of €1.30 per share to shareholders of record on 12/31 (be careful and determine how many shares are outstanding).
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Homework Answers
| Transaction | Account Titles | Debit | Credit |
| $ | $ | ||
| 1. | Employee Compensation Expense ( 3,500 @ $ 100) | 350,000 | |
| Share Capital ( 3,500 @ $ 2.50) | 8,750 | ||
| Paid-in Capital in Excess of Par Value: Common Shares | 341,250 | ||
| 2. | Treasury Stock | 1,250,000 | |
| Cash | 1,250,000 | ||
| 3. | Employee Compensation Expense ( 5,600 shares @ $ 132 ) | 739,200 | |
| Treasury Stock ( 5,600 shares @ $ 125 ) | 700,000 | ||
| Paid-in Capital: Treasury Stock | 39,200 | ||
| 4. | Cash | 350,000 | |
| Preference Share Capital | 250,000 | ||
| Paid-in Capital in Excess of Par Value: Preferred Shares | 100,000 | ||
| 5. | Cash | 366,000 | |
| Paid-in Capital: Treasury Stock | 9,000 | ||
| Treasury Stock ( 3,000 x $ 125 ) | 375,000 | ||
| 6. | Retained Earnings | 132,730 | |
| Dividends Payable: Common Shares | 132,730 |
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