7. Lawn Spray Inc. develops and produces spraying equipment for lawn maintenance

Question

7.

Lawn Spray Inc. develops and produces spraying equipment for lawn maintenance and industrial uses. On January 31 of the current year, Lawn Spray Inc. reacquired 18,000 shares of its common stock

The stock outstanding when a corporation has issued only one class of stock.

at $19 per share. On June 14, 13,500 of the reacquired shares were sold at $27 per share, and on November 23, 3,200 of the reacquired shares were sold at $20.

Required:

Capital contributed to a corporation by the stockholders and others.

CHART OF ACCOUNTS Lawn Spray 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 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 350 Stock Dividends Distributable 351 Cash Dividends 352 Stock Dividends 390 Income Summary

Explanation / Answer

Answer 1. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 31-Jan Treasury Stock    342,000.00 18,000 Shares X $19 Cash    342,000.00 (Record the purchase of Treasury Stock) 14-Jun Cash    364,500.00 13,500 Shares X $27 Treasury Stock    256,500.00 13,500 Shares X $19 Paid in capital in Excess of Par - Treasury Stock    108,000.00 13,500 Shares X $8 (Record the issue of Treasury Stock) 23-Nov Cash      64,000.00 3,200 Shares X $20 Treasury Stock      60,800.00 3,200 Shares X $19 Paid in capital in Excess of Par - Treasury Stock        3,200.00 3,200 Shares X $1 (Record the issue of Treasury Stock) Answer 2. Paid in capital in Excess of Par - Treasury Stock    111,200.00 Answer 3. Treasury Stock - Dec 31 - 1,300 Shares x $19      24,700.00 Answer 4. Lawn Sparay Inc Balance Sheet (Partial) Dec 31 Stockholders' Equity Treasury Stock - 1,300 Shares    (24,700.00)

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