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Carey Co's Balance Sheet

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The stockholders' equity section of Carey Co's balance sheet at December 31,2012, was follows
common stock--$10 par (authorized 1000000 share $6000000
issued and outstanding 600000 shares)
Paid in capital in excess of par 1500000
Retained earnings 3250000
-------------------
$10750000
Prepare journal entries (A,B,C) and show proper disclosure (C) to reflect the following treasury stock transactions showing how each is accounted for under the cost method.

A. On 1/4/2013, having idle cash, carey Co repurchased 20000 shares of its outstanding stock for $ 500000.
B. On 3//2013 carey sold 5000 of these reacquired shares at $28 per share.
C. Show the proper disclosures in the stockholders'equity section of the balance sheet issued at the end of the first quarter, March 31, 2013. Assume net income of $100000 during the first quarter.
D. On 6/30/2013 the firm sold 10000 of the reacquired shares for $21 per share.

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A spreadsheet template is provided to assist.

Solution provided by:
Carol Sargent, PhD
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  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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