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2. (15 pts) Erie Company has 300,000 shares of authorized and issued common stock, $2 par....

2. (15 pts) Erie Company has 300,000 shares of authorized and issued common stock, $2 par. Additional paid in capital for the

2. (15 pts) Erie Company has 300,000 shares of authorized and issued common stock, $2 par. Additional paid in capital for these shares amounts to $3,000,000. Record the following events: Dr. Mar 1, Purchased 15,000 shares of stock as treasury stock at $8 per share. Apr 1, Resold 1,000 shares of treasury stock into the market at $12 per share. May 1, Issued 5,000 treasury shares to employees at $7 per share, as part of an ESOP. That is, there is no compensation expense, as all employees could participate.
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Answer : journal entries in the books of Erie company :

Date Accounts title Debit Credit
Mar 1 treasury stock (15,000 × $8) $1,20,000
Cash $1,20,000
April 1 cash (1,000 × $12) $12,000
Treasury stock - common stock (1,000 × $8) $8,000
Additional paid in capital from treasury stock (1,000 × $4) $4,000
May 1 cash (5,000 × $7) $35,000
Additional paid in capital from treasury stock (5,000 × $1) $5,000
Treasury stock - ESOPS (5,000 × $8) $40,000
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