eBook Show Me How Calculator Treasury stock transactions Chart of Accounts Journ
ID: 2606087 • Letter: E
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eBook Show Me How Calculator Treasury stock transactions Chart of Accounts Journal Final Questions Instructions Mystic Lake Inc bottles and distributes spring water. On July 9 of the current year, Mystic Lake reacquir September 22, Mystic Lake inc. sold 32,400 of the reacquired shares at $49 per share. The remaining 7,900 shares were sold at 541 per share on November 23 ed 40,300 shares of its common stock at $42 per share. On Required: A Journalize the transactions of Julty 9, September 22, and November 23. Refer to the Chart of Accountao for exact wording of account ttes B. What is the balance in Paid-in Canital from Sale of Treasury Stock on December 31 of the current year? C. For what reasons might Mystic Lake have purchased the treasury stock?Explanation / Answer
A. The following are the required journal entries.
..........To Cash a/c
b. Paid in capital from sale of treasury stock account balance as on december 31.
($226,800 -$7,900) =>$218,900 credit balance.
c. To support the market price of the stock.
Date General journal Post ref Debit Credit July 9 Treasury stock a/c $1,692,600..........To Cash a/c
$1,692,600 (being treasury stock purchased @$42 per share , 40,300 shares) sept 22 Cash a/c (32,400 * $49) $1,587,600 .....................to treasury stock a/c (32,400 * 42) $1,360,800 .............To Paid in capital from sale of treasury stock a/c..($7*32,400) $226,800 (being 32,400 shares purchased for $42 now sold for $49, $7 per share is credited to paid in capital from treasury account) Nov 23 cash a/c ($41 * 7,900) $323,900 paid in capital from sale of treasury stock a/c...($1 * 7,900) $7,900 ..............To treasury stock a/c....($42 * 7900) $331,800 (being 7,900 shares sold off as treasury stock a/c)Related Questions
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