Question

Required: Prepare memorandum and journal entries to record the preceding transactions. 16.15 Treasury stock, Cost Method On January 1. Larain Corporation had 2.000 shares of Par 187 authorized and outstanding. These shares were originally issued at a price of $26 per 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 7o Pet following stock transactions occurred: outstanding. These were issued at a price of $75 per share. During the year, the 1. March 3: Lorain reacquired 100 shares of its own common stock at a cost of $24 per sa HOW 2. April 27: It sold 25 shares of the common stock acquired on March 3 for $33 per share. HOW 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

15-15

Answer 1

Answer:

Date	Account title and Explanation	Debit	Credit
Mar 3	Treasury stock [100 x $24 cost]	$2,400
	Cash		$2,400
	[To record purchase of own shares]
Apr 27	Cash [25 x $33]	$825
	Treasury stock [25 x $24 cost]		$600
	Paid-in capital in excess of par from treasury stock		$225
	[To record sale of treasury stock]
July 10	Cash [25 x $22]	$550
	Paid-in capital in excess of par from treasury stock	$50
	Treasury stock [25 x $24 cost]		$600
	[To record sale of treasury stock]
Oct 12	Common stock [50 x $5 par]	$250
	Paid-in-capital in excess of par-common stock [50 x ($26-5)]	$1,050
	Treasury stock [50 x $24 cost]		$1,200
	Retained earnings		$100
	[To retirement of treasury stock]