#17) Exceptional Marketing Corporation reported the following stockholders\' equ
ID: 2716341 • Letter: #
Question
#17) Exceptional Marketing Corporation reported the following stockholders' equity at Decemebr 31 (adapted and in millions):
Common Stock.................................$256
Additonal paid-in capital............ 275
Retained earings..............................2,129
Treasury Stock............................... (671)
Total stockholders' equity..............$ 1,989
During the nest year, Exceptional Marketing purchsed treasury stock at a cost of $23. million and resold treasury stock for $7 million (this treasury stock has cost Exceptional Marketing $2million). Record the purcahse and resale of Exception Marketing's treasury stosck. Overall, how much did stockholders' equity increase or decrease as a result of the two treasury stock transaction?
Record the purcahse and resale of Eceptional Marketing's treasury stock (record debits first, then credits. Exclude explanations from any juornal entries. Enter amounts in millions.)
First, record the purcahse of the treasury stock.
Journal Entry
Accounts Debits Credits
Millions
(Cash, Common Stock, Dividends payable, Paid-in capital in excess of par, __________ ________
Paid-in Capital from Treasury Stock Transactons, Preferred Stock,
Retained Earnings, Treasury Stock)
___________________________________________________________ ____________ ________
___________________________________________________________ ____________ _________
___________________________________________________________ ___________ __________
Explanation / Answer
Ans. Record the purcahse and resale of Exception Marketing's treasury stock.
Journal Entries
1) Purcahse of the treasury stock.
Debit Credit Million$
Treasury stock Cash 23
2) Resold treasury stock for $7 million (this treasury stock has cost Exceptional Marketing $2million).
If treasury shares are reissued, Cash is debited for the amount received and Treasury Stock is credited for the cost of the shares. Any difference may be debited or credited to Paid-in Capital in Excess of Par.
Debit Credit Million$
Cash 7
Treasury Stock 2
Paid-in Capital in Excess of Par 5
3) Total Stockholders' equity increase or decrease as a result of the two treasury stock transaction is as follows.
Total stockholder's equity after above transactions is $1957 million.
$million purchase Resold closing Common Stock. 256 -23 -7 240 Additonal paid-in capital. 275 5 280 Retained earings 2129 2129 Treasury Stock (671) 23 2 (692) Total stockholders' equity 1989 0 1,957
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