Homework SoursePrepare journal entries for the following transactions use t
Prepare journal entries for the following transactions (use the cost method for re-issuance):
1. On 1/1/2016, company EXO issued 20,000 common shares, each having a par value of $1 at $10 per share.
2. On 7/1/2016, EXO repurchased 5,000 shares of common stock at $8 per share.
3. On 10/1/2016, EXO re-issued 1,000 shares of the treasury stock repurchased on 7/1 for $10 per share.
4. On 11/1/2016, EXO re-issued another 2,000 shares of the treasury stock repurchased on 7/1 for $7.5 per share. 5. On 12/1/2016, EXO re-issued another 1,000 shares of the treasury stock repurchased on 7/1 for $7 per share.
Solution
Journal Entries (Amounts in $)
| No. | Date | Account Titles and Explanation | Debit | Credit |
| 1 | 1/1/16 | Cash (20,000 shares*$10) | 200,000 | |
| Common Stock (20,000 shares*$1 par) | 20,000 | |||
| Paid-in Capital in excess of par value-Common Stock (200,000-20,000) | 180,000 | |||
| 2 | 7/1/16 | Treasury Stock (5,000 shares*$8 per share) | 40,000 | |
| Cash | 40,000 | |||
| 3 | 10/1/16 | Cash (1,000 shares*$10) | 10,000 | |
| Treasury Stock (1,000 shares*$8 cost) | 8,000 | |||
| Additional paid-in capital-Treasury Stock (10,000-8,000) | 2,000 | |||
| 4 | 11/1/16 | Cash (2,000 shares*$7.50) | 15,000 | |
| Additional paid-in capital-Treasury Stock (Bal. fig) (16,000-15,000) | 1,000 | |||
| Treasury Stock (2,000 shares*$8 cost) | 16,000 | |||
| 5 | 12/1/16 | Cash (1,000 shares*$7) | 7,000 | |
| Additional paid-in capital-Treasury Stock (8,000-7,000) | 1,000 | |||
| Treasury Stock (1,000 shares*$8 cost) | 8,000 |
