Ellison Company\'s balance sheet shows: Common stock, $20 par $3,000,000 Paid-in
ID: 2423845 • Letter: E
Question
Ellison Company's balance sheet shows:
Common stock, $20 par $3,000,000
Paid-in capital in excess of par 1,050,000
Retained earnings 750,000
Instructions
Record the following transactions by the cost method.
(a) Bought 8,000 shares of its common stock at $29 a share.
(b) Sold 4,000 treasury shares at $30 a share.
(c) Sold 2,000 shares of treasury stock at $26 a share.
Explanation / Answer
4000
1) Treasury Stock A/c (8000x29) 232000 To CAsh 232000 (Record of purchase of its own Common Stock) 2) CAsh A/c (4000x30) 120000 To Treasury stock 116000 To Paid in capital from treasury stock4000
3) cash A/c (2000x26) 52000 Paid in Capital from Treasury stock 4000 Retained Earnings 2000 To Treasury Stock 58000 (Being discount from treasury stock adjusted from excess paid in capital and retained earnings