Treasury Stock Transactions Biscayne Bay Water Inc. bottles and distributes spri

Question

Treasury Stock Transactions

Biscayne Bay Water Inc. bottles and distributes spring water. On May 14 of the current year, Biscayne Bay Water Inc. reacquired 2,500 shares of its common stock at $71 per share. On September 6, Biscayne Bay Water Inc. sold 1,900 of the reacquired shares at $75 per share. The remaining 600 shares were sold at $67 per share on November 30.

a. Journalize the transactions of May 14, September 6, and November 30. For a compound transaction, if an amount box does not require an entry, leave it blank.

b. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year?
$

c. Where will the balance in Paid-In Capital from Sale of Treasury Stock be reported on the balance sheet?

d. For what reasons might Biscayne Bay Water Inc. have purchased the treasury stock?

Explanation / Answer

Journal entries date Accounting titles & Explanations Debit Credit 14-May Treasury stock 177500 cash 177,500 (2,500*71) 6-Sep Cash (1900*75) 142500 Treasury stock (1900*71) 134900 paid in capital from sale of TS 7600 30-Nov Cash (600*67) 40200 paid in capital from sale of TS 2400 Treasury stock (600*71) 42600 b) Balance in paid in capital from sale of Treasury stock (7600-2400)= 5200 answer credit c) it will be reported under Paid- in capital d) A company may buy its own stock to provide shares for resale to employees.,for reissuing as a bonus to employees ,or for supporting the market price of stock.

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