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Journal entries

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On Oct 10, the stockholders' equity of Syntax Systems appears as follows

Comon stock---$10 par value, 72,000 shares
authorized, issued, and outstanding.......................$720.000
Paid-in capital in excess of par value, common stock.........$216,000
Retained earnings............................................$864,000
Total stockholders.........................................$1,800,000

1: Prepare journal entries to record the following transactions for Syntax Systems
a: Purchased 5,000 shares of its own common stock at $22 per share on Oct 11.
b: Sold 1,000 trasury shares on Nov 1 for $28 cash per share
c: Sold all remaining treasury shares on Nov 25 for $17 cash per share
2: Explain how the company's equity section changes after the Oct 11 treasury stock purchase, and prepare the revised equity section of its balance sheet at that date.

Solution Preview

1. a. Total amount of treasury stock = 5,000 X22 =$110,000. The entry is
Treasury Stock Dr 110,000
Cash Cr 110,000

b. When treasury stock is sold above cost, the credit to treasury stock is credited with the cost price. The difference between sale price and cost price goes to paid in capital - treasury stock. The entry is
Cash Dr (1,000 X 28) 28,000
...

Solution Summary

The solution explains the journal entries for the given equity transactions and the impact on the equity section in the balance sheet

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