P2 The following information pertains to stock transactions

P2. The following information pertains to stock transactions of Warrior, Inc. during 2017 On 1/11/2017, Warrior issued 40,000 share of common stock for $120/share. Its par is $100/share. On 7/1/2017, Warrior oyote reacquired 8,000 shares of its own common stock at $110/share. On 7/15/2017, Warrior reacquired 7,000 shares of its own common stock at $105/share On 8/1/2017, Warrior sold 5,000 shares of the treasury stock for S112/share. On 11/1/2017, Warrior sold 6,000 shares of the stock reacquired for $95/share. On 12/31/2017, Warrior retired the remaining 4,000 shares of the stock reacquired. Instructions: Prepare any necessary journal entries for the above transactions using the LIFO flow assumption and the cost method,

Solution

Journal entries: Date Accounts title and explanation Debit $ Credit $ 11-Jan Cash account Dr. 4800000    Common Stock Capital 4000000    Additional Paid in capital 800000 1-Jul Treasury Stock Account Dr. 880000      Cash account 880000 15-Jul Treasury Stock Account Dr. 735000      Cash account 735000 1-Aug Cash account (5000*112) 560000      Treasury Stock Account (5000*105) 525000      Paid in capital-Treasury Stock (5000*7) 35000 1-Nov Cash account (6000*95) 570000 Paid in capital-Treasury Stock 35000 Retained earnings (Balancing figure) 45000      Treasury Stock (2000*105+4000*110) 650000 31-Dec Common Stock Account Dr. 400000 Loss on retirement of Stock Account Dr. 40000      Treasury stock (4000 shares b @110) 440000