Conyer Water Inc. Bottles and Distributes spring water. On July 5 of the current
ID: 2353526 • Letter: C
Question
Conyer Water Inc. Bottles and Distributes spring water. On July 5 of the current year, conyer water inc. reacquited 12,500 shares of its common stock at $80 per share. on november 3, conyers water inc. sold 7000 of the reacquired shares at $84 per share. the remaining 5500 shares were sold at $78 per share on December 10.journalize the transactions of july 5, november 3, and december 10
what is the balance in paid in capital from sale of treasury stock on december 31 of the current year?
where will the balance in paid in capital from sale of treasury stock be reported on the balance sheet?
For what reasons might Conyer Water Inc. have purchased the treasury stock?
Explanation / Answer
5 Jul Tresury Stock Dr $1,000,000 Cash Cr $1,000,000 (Buy back of 12500 Shares@$80 = $1,000,000 ) 3 Nov Cash (7000@$84) Dr 588,000 Treasury Stock (7000@$80) Cr 560,000 Additional paid-in-capital (treasury stock) Cr 28,000 (Record sale of 7,000 shares of treasury stock at $84) 10 Dec Cash (5500@$78) Dr $429,000 Additional paid-in-capital (treasury stock) Dr 11,000 Treasury Stock (5,500 × $80) Cr $440,000 (Record sale of 5,500 shares of treasury stock at $78) what is the balance in paid in capital from sale of treasury stock on december 31 of the current year? Balance will be 28000-11000 = 17000 where will the balance in paid in capital from sale of treasury stock be reported on the balance sheet? In the balance sheet, treasury stock is reported as a contra account after retained earnings in the stockholders' equity section. This means the amount reported as treasury stock is subtracted from the other stockholders' equity amounts. Treasury shares are included in the number reported for shares issued but are subtracted from issued shares to determine the number of outstanding shares. For what reasons might Conyer Water Inc. have purchased the treasury stock? Companies purchase treasury stock if shares are needed for employee compensation plans or to acquire another company, and to reduce the number of outstanding shares because the stock is considered a good buy. Purchasing treasury stock may stimulate trading, and without changing net income, will increase earnings per share.