Problem 13-2A Fechter Corporation had the following stockholders\'equity account
ID: 2445716 • Letter: P
Question
Problem 13-2A
Fechter Corporation had the following stockholders'equity accounts on January 1, 2014: Common Stock ($5 par) $547,750, Paid-in Capital in Excess of Par-Common Stock $224,850, and Retained Earnings $100,160. In 2014, the company had the following treasury stock transactions.
March. 1 Purchased 5,740 shares at $8 per share.
June. 1 Sold 1,380 shares at $12 per share.
Sept. 1 Sold 1,370 shares at $11 per share.
Dec. 1 Sold 1,200 shares at $7 per share.
Fechter Corporation uses the cost method odf accounting for treasury stock. In 2014, the company reported net income of $28,520.
a. Journalize the treasury stock transactions, and prepare the closing entry at December 31, 2014, for net income.
b. Open accounts for Paid-in Capital from Treasury Stock, And Retained Earnings.
c. Preapre the stockholders' equity section for Fechter Corporation at December 31, 2014. (Balance Sheet Partial)
Explanation / Answer
March. 1 Purchased 5,740 shares at $8 per share.
Shares Dr. 28700
Profit and loss account Dr.17220
To bank 45920
June. 1 Sold 1,380 shares at $12 per share.
Bank Dr. 16560
To shares 6900
To Profit and loss account 9660
Sept. 1 Sold 1,370 shares at $11 per share.
Bank Dr. 15070
To shares 6850
To Profit and loss account 8220
Dec. 1 Sold 1,200 shares at $7 per share
Bank Dr. 8400
To shares 6000
To Profit and loss account 2400
31. Dec
Profit and loss account Dr. 3060
To Retained earnings account 3060
31.Dec
Bank Dr. 28520
To REtained earnings 28520
Paid-in Capital from Treasury Stock
Retained Earnings
stockholders' equity section for Fechter Corporation at December 31, 2014
Particulars amount Particulars Amount Balance c/d 224850 Shares sold 6900 Shares purchase 28700 Shares sold 6850 Shares sold 6000 To balance B/d 233800