On January 1, 2017, the stockholders’ equity section of Newlin Corporation shows

Question

On January 1, 2017, the stockholders’ equity section of Newlin Corporation shows common stock ($5 par value) $1,500,000; paid-in capital in excess of par $1,090,000; and retained earnings $1,160,000. During the year, the following treasury stock transactions occurred.

A) Journalize the treasury stock transactions.

B) Restate the entry for September 1, assuming the treasury shares were sold at $12 per share.

Mar. 1 Purchased 47,000 shares for cash at $15 per share. July 1 Sold 10,500 treasury shares for cash at $17 per share. Sept.   1 Sold 9,000 treasury shares for cash at $14 per share.

Explanation / Answer

A) Journal Entries (All amounts in $) Date Particulars Debit Credit 01-Mar Treasury Stock A/c DR 705000 To Cash A/c 705000 01-Jul Cash A/c DR 178500 To Treasury Stock A/c 157500 To Retained Earnings A/c 21000 01-Sep Cash A/c DR 126000 Retained Earnings A/c DR 9000 To Treasury Stock A/c 135000 B) September 1 entry restated 01-Sep Cash A/c DR 108000 Retained Earnings A/c DR 27000 To Treasury Stock A/c 135000

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