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Carey Co's: Treasury stock purchase and reissue journal entr

The stockholders' equity section of Carey Co's balance sheet at December 31,2012, was as 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. (show computation)

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.

Solution Preview

See excel file attached for readable formatting....

A. DEBIT CREDIT
Treasury stock $500,000.00 < -- 20,000 shares so this was $25.00 per share
Cash $500,000.00 < -- repurchases so gave up cash (not issuing stock)

B.
Cash $140,000.00 ...

Solution Summary

The journal entries and instructional notes for each are shown. Click in cells to see computations.

$2.19