Exercise 13-8 Rinehart Corporation purchased from its stockholders 5,200 shares

Question

Exercise 13-8 Rinehart Corporation purchased from its stockholders 5,200 shares of its own previously issued stock for $249,600. It later $46 per share, and finally 1,400 shares for $40 per share. resoid 1,900 shares for $51 per share, then 1,900 more shares for automatically indented when amount is entered. Do not Prepare journal entries for the purchase of the treasury stock and the three sales of treasury stock. (Credit account titles are indent manually.) Debit Credit Account Titles and Explanation To record purchase from stockholders-) To recond sales of shares at s51 per share.) (To record sales of shares at $46 per share.) (To record sale of shares at $40 per share.)

Explanation / Answer

Ans. Accounts Titles & Explanations Debit Credit 1 Treasury stock 249600 To Cash 249600 2 Cash (1900*51) 96900 To Treasury stock (1900 * 48) 91200 To Additional paid-in-capital [1900 * (51-48)] 5700 3 Cash (1900*46) 87400 Additional paid-in-capital [1900 * (48-46)] 3800 To Treasury stock (1900*48) 91200 4 Cash (1400*40) 56000 Additional paid-in-capital 1900 Retained earnings (bal. fig.) 9300 To Treasury stock (1400*48) 67200 *Additional paid-in-capital is the closing balance (in fourth entry) which is calculated by the following way: Credit balance of Additional paid-in-capital 5700 Less: Debit balance of Additional paid-in-capital -3800 Remaining balance in Additional paid-in-capital 1900 *The remaining balance of treasury stock (in fourth entry) is transferred to retained earnings account. *Face value of treasury stock   = 249600 / 5200 48

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