Lawn Smart Inc. develops and produces spraying equipment for lawn maintenance an
ID: 2426734 • Letter: L
Question
Lawn Smart Inc. develops and produces spraying equipment for lawn maintenance and industrial uses. On May 29 of the current year, Lawn Smart Inc. reacquired 19,100 shares of its common stock
The stock outstanding when a corporation has issued only one class of stock.
at $20 per share. On August 11, 13,700 of the reacquired shares were sold at $25 per share, and on October 30, 4,000 of the reacquired shares were sold at $21.
Required:
Capital contributed to a corporation by the stockholders and others.
How will the balance in Treasury Stock be reported on the balance sheet?
Income Summary
A. Journalize the transactions of May 29, August 11, and October 30. Refer to the Chart of Accounts for exact wording of account titles.
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JOURNAL
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Solution
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B. What is the balance in Paid-In Capital
Capital contributed to a corporation by the stockholders and others.
from Sale of Treasury Stock on December 31 of the current year?selector 1
Debit
Credit
Points:
Feedback
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Explanation
C. What is the balance in Treasury Stock on December 31 of the current year?
selector 1
Credit
Debit
Points:
Feedback
Check My Work
Explanation
D. How will the balance in Treasury Stock be reported on the balance sheet?
selector 1
As an asset
As an addition to stockholder's equity
As a deduction from stockholder's equity
Treasury Stock is not reported on the balance sheet
710
A. Journalize the transactions of May 29, August 11, and October 30. Refer to the Chart of Accounts for exact wording of account titles. B. What is the balance in Paid-In CapitalCapital contributed to a corporation by the stockholders and others.
from Sale of Treasury Stock on December 31 of the current year? C. What is the balance in Treasury Stock on December 31 of the current year? D.How will the balance in Treasury Stock be reported on the balance sheet?
CHART OF ACCOUNTS Lawn Smart Inc. General Ledger ASSETS 110 Cash 120 Accounts Receivable 131 Notes Receivable 132 Interest Receivable 141 Merchandise Inventory 145 Office Supplies 151 Prepaid Insurance 181 Land 193 Equipment 194 Accumulated Depreciation-Equipment LIABILITIES 210 Accounts Payable 221 Notes Payable 226 Interest Payable 231 Cash Dividends Payable 236 Stock Dividends Distributable 241 Salaries Payable 261 Mortgage Note Payable EQUITY 311 Common Stock 312 Paid-In Capital in Excess of Par-Common Stock 315 Treasury Stock 321 Preferred Stock 322 Paid-In Capital in Excess of Par-Preferred Stock 331 Paid-In Capital from Sale of Treasury Stock 340 Retained Earnings 351 Cash Dividends 352 Stock Dividends 390Income Summary
A. Journalize the transactions of May 29, August 11, and October 30. Refer to the Chart of Accounts for exact wording of account titles.
PAGE 10
JOURNAL
DATE DESCRIPTION POST. REF. DEBIT CREDIT1
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5
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Solution
DATE DESCRIPTION POST. REF. DEBIT CREDIT1
2
3
4
5
6
7
8
B. What is the balance in Paid-In Capital
Capital contributed to a corporation by the stockholders and others.
from Sale of Treasury Stock on December 31 of the current year?selector 1
Debit
Credit
Points:
Feedback
Check My Work
Explanation
C. What is the balance in Treasury Stock on December 31 of the current year?
selector 1
Credit
Debit
Points:
Feedback
Check My Work
Explanation
D. How will the balance in Treasury Stock be reported on the balance sheet?
selector 1
As an asset
As an addition to stockholder's equity
As a deduction from stockholder's equity
Treasury Stock is not reported on the balance sheet
REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Merchandise Sold 515 Credit Card Expense 520 Salaries Expense 531 Advertising Expense 532 Delivery Expense 533 Selling Expenses 534 Rent Expense 535 Insurance Expense 536 Office Supplies Expense 537 Organizational Expenses 562 Depreciation Expense-Equipment 590 Miscellaneous Expense710
Explanation / Answer
A
29May Treasury Stock(19100 *$20) Dr.$382000
To cash 382000
11 Aug. cash (13700*$25) Dr.$342500
To Treasury stock(13700 *$20) $274000
To Paid-In Capital from Sale of Treasury Stock $68500
30 Oct cash (4000*$21) Dr.$ 84000
To Treasury stock(4000 *$20) $80000
To Paid-In Capital from Sale of Treasury Stock $4000
B balance in Paid-In Capital Capital contributed = (274000 +68500) + (80000 +4000)
= $426500
C. balance in Treasury Stock on December 31 = 19100 share - (13700 share + 4000 share)
= 1400 shares
Treasury stock = 1400 shares* $20
= $28000
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