eBook Show Me How Calculator Treasury Stock Transactions Lava Lake Inc. bottles
ID: 2537067 • Letter: E
Question
eBook Show Me How Calculator Treasury Stock Transactions Lava Lake Inc. bottles and distributes spring water. On February 11 of the current year, Lava Lake reacquired 4,900 shares of its common stock at $87 per share. On April 30, Lava Lake Inc. sold 3,400 of the reacquired shares at $97 per share on August 22, Laa Lake Inc. 1,500 shares at tag per s are a. Journalize the transactions of February 11, April 30, and August 22. For a compound transaction, if an amount box does not require an entry, leave it blank. Feb. 11 Apr. 30 ) Aug.22 b. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year? c. For what reasons might Lava Lake have purchased the treasury stock? Previous Next 12 AM 3/2/2018 Check My Work ^ 0 ns searchExplanation / Answer
Answer a. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 17-Feb Treasury Stock 426,300.00 4,900 Shares X $87 Cash 426,300.00 4,900 Shares X $87 (record the purchase of treasury stock) 30-Apr Cash 329,800.00 3,400 Shares X $97 Treasury Stock 295,800.00 3,400 Shares X $87 Paid in Capital in Excess of par - Treasury 34,000.00 3,400 Shares X $10 (Record the sale of Treasury Stock) 22-Aug Cash 124,500.00 1,500 Shares X $83 Paid in Capital in Excess of par - Treasury 6,000.00 1,500 Shares X $4 Treasury Stock 130,500.00 1,500 Shares X $87 (Record the reissue of Treasury Stock) Answer b. Paid in Capital in Excess of par - Treasury 28,000.00 Answer c. Company Purchase Treasury stock due to the following reasons: 1. To meet the additional stock needed for stock options plan, for convertible bonds or convertible preference shares etc. 2. To increase the market price of the shares. 3. To eliminate the ownership interests of a stockholders. 4. To makes shares available for a pending merger.
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