Discount Center furniture, Inc. completed the following treasury stock transacti

Question

Discount Center furniture, Inc. completed the following treasury stock transactions in 2014: Dec. 1 Purchased 1,400 shares of the company's $1 par value common stock as treasury stock, paying cash of $5 per share. Sold 400 shares of the treasury stock for cash of $8 per share. Sold 800 shares of the treasury stock for cash of $2 per share. (Assume the balance in Paid-In Capital from Treasury Stock Transactions on December 20 52000) 15 20 Requirements 1. Journalize these transactions. Explanations are not required. 2. How will Discount Center Furniture, Inc. report treasury stock on its balance sheet as of December 31, 2014?

Explanation / Answer

1.

2. Discount Center Furniture, Inc. will report treasury stock beneath retained earnings on the balance sheet as a reduction to total stockholders’ equity.

Date Account Titles Debit Credit Dec. 1, 2014 Treasury Stock—Common
($5 per share × 1,400 shares) $7,000 Cash $7,000 Dec. 15, 2014 Cash ($8 per share × 400 shares) $3,200 Treasury Stock—Common
  ($5 per share × 400 shares) $2,000 Paid-In Capital from Treasury Stock Transactions
($3 × 400 shares) $1,200 Dec. 20, 2014 Cash ($2 per share × 800 shares) $1,600 Paid-In Capital from Treasury Stock Transactions $2,000 Retained Earnings $400 Treasury Stock—Common
  ($5 per share × 800 shares) $4,000

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