Exercise 11-7 Rinehart Corporation purchased from its stockholders 5,700 shares
ID: 2520006 • Letter: E
Question
Exercise 11-7
Rinehart Corporation purchased from its stockholders 5,700 shares of its own previously issued stock for $290,700. It later resold 1,825 shares for $54 per share, then 1,825 more shares for $49 per share, and finally 2,050 shares for $43 per share.
Prepare journal entries for the purchase of the treasury stock and the three sales of treasury stock. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Account Titles and Explanation
Debit
Credit
(To record purchase from stockholders.)
(To record sales of shares at $54 per share.)
(To record sales of shares at $49 per share.)
(To record sale of shares at $43 per share.)
Account Titles and Explanation
Debit
Credit
(To record purchase from stockholders.)
(To record sales of shares at $54 per share.)
(To record sales of shares at $49 per share.)
(To record sale of shares at $43 per share.)
Explanation / Answer
Explanation :
1. Treasury Stock = 5,700 x $51 = $290,700
2. Cash = 1,825 x $54= $98,550
Treasury Stock = 1,825 x $51 = $93,075
Paid-in Capital from Treasury Stock = 1,825 x $3 ($54 - $51) = $5475
3.Cash = 1,825 x $49 = $89,425
Paid-in Capital from Treasury Stock = 1,825 x $2 ($51 - $49) = $3,650
Treasury Stock = 1,825 x $51 = $93,075
4. Cash = 2,050 x $43 = $88,150
Paid-in Capital from Treasury Stock = $5,475 - $3,650 = $1,825
Retained earnings = (2,050 x $8) - $1,825 = $14,575
Treasury Stock = 2,050 x $51 = $104,550
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Account Titles and Explanation Debit Credit Treasury Stock $290,700 Cash $290,700 (To record purchase from stockholders) Cash $98,550 Treasury Stock $93,075 Paid-in Capital from Treasury Stock $5,475 (To record sales of shares at $54 per share.) Cash $89,425 Paid-in Capital from Treasury Stock $3,650 Treasury Stock $93,075 (To record sales of shares at $49 per share.) Cash $88,150 Paid-in Capital from Treasury Stock $1,825 Retained Earnings $14,575 Treasury Stock $104,550 (To record sale of shares at $43 per share.)Related Questions
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