help Ellison Company\'s balance sheet shows: Common stock, $20 par $3,000,000 Pa

Question

help Ellison Company's balance sheet shows: Common stock, $20 par $3,000,000 Paid-in capital in excess of par 1,050,000 Paid-in capital from treasury stock 0 Regained earnings 750,000 Ellison then entered into the following transactions (a) Bought 8,000 shares of its common stock at $29 a share. (b) Sold 4,000 treasury shares at $30 a share. (c) Sold 2,000 shares of treasury stock at $26 a share. 1. Prepare journal entries for the transactions above. 2. Indicate the effect each of the three transactions has on the financial statement (I=increase, D=Decrease, NE=No effect)

Explanation / Answer

Transactions Particulars Debit Credit Assets Liabilities Stockholder's Equity Paid in Capital Retained Earnings a Common stock 160000 Decrease Decrease Decrease Decrease No effect Paid in capital in excess of par 72000 Cash 232000 b Cash 120000 Increase Increase Increase Increase No effect Paid in capital from treasury stock 120000 c Cash 52000 Increase Increase Increase Increase No effect Paid in capital from treasury stock 52000

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