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    Greeve Corporation

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    Greeve Corporation had the following stockholders' equity accounts on January 1, 2006: Common Stock ($1 par) $400,000, Paid-in Capital in Excess of Par Value $500,000, and Retained Earnings $100,000. In 2006, the company had the following treasury stock transactions.
    Mar. 1 Purchased 5,000 shares at $7 per share.
    June 1 Sold 1,000 shares at $10 per share.
    Sept. 1 Sold 2,000 shares at $9 per share.
    Dec. 1 Sold 1,000 shares at $5 per share.
    Greeve Corporation uses the cost method of accounting for treasury stock. In 2006, the company reported net income of $60,000.
    Instructions
    (a) Journalize the treasury stock transactions, and prepare the closing entry at December 31, 2006, for net income.
    (b) Open accounts for (1) Paid-in Capital from Treasury Stock, (2) Treasury Stock, and (3) Retained Earnings. Post to these accounts using J12 as the posting reference.
    (c) Prepare the stockholders' equity section for Greeve Corporation at December 31, 2006.

    part a requires 5 journal entries, part b, you need to present the general journal for certain accounts. The format should be shown as follows:
    Paid-in Capital from Treasury Stock

    Date Explanation Ref. Debit Credit Balance

    For part c, you need to show the balance sheet presentation of the stockholders equity section.

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    Solution Preview

    Greeve Corporation had the following stockholders' equity accounts on January 1, 2006: Common Stock ($1 par) $400,000, Paid-in Capital in Excess of Par Value $500,000, and Retained Earnings $100,000. In 2006, the company had the following treasury stock transactions.

    Mar. 1 Purchased 5,000 shares at $7 per share.
    June 1 Sold 1,000 shares at $10 per share.
    Sept. 1 Sold 2,000 shares at $9 per share.
    Dec. 1 Sold 1,000 shares at $5 per share.

    Greeve Corporation uses the cost method of accounting for treasury stock. In 2006, the company reported net income of $60,000.

    Instructions
    (a) Journalize the treasury stock transactions, and prepare the closing entry at December 31, 2006, for ...

    Solution Summary

    This solution is comprised of a detailed explanation to journalize the treasury stock transactions, and prepare the closing entry at December 31, 2006, for net income.

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