Problem 11-2A (Part Level Submission) Fechter Corporation had the following stoc
ID: 2465105 • Letter: P
Question
Problem 11-2A (Part Level Submission)
Fechter Corporation had the following stockholders’ equity accounts on January 1, 2015: Common Stock ($5 par) $501,950, Paid-in Capital in Excess of Par—Common Stock $176,030, and Retained Earnings $116,910. In 2015, the company had the following treasury stock transactions.
Fechter Corporation uses the cost method of accounting for treasury stock. In 2015, the company reported net income of $32,320.
(a)
Journalize the treasury stock transactions, and prepare the closing entry at December 31, 2015, for net income. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
Mar. 1
June 1
Sept. 1
Dec. 1
Dec. 31
part (b)
part (b)
Journalize the adjusting entries at January 31 for the outstanding notes payable. (Hint: Use one-third of a month for the Girard Bank note.
part(c)
Prepare the current liabilities section of the balance sheet at January 31, 2015. Assume no change in accounts payable.
Mar. 1 Purchased 6,810 shares at $8 per share. June 1 Sold 1,390 shares at $12 per share. Sept. 1 Sold 1,170 shares at $10 per share. Dec. 1 Sold 1,120 shares at $7 per share.Explanation / Answer
Journal of Treasury Stock Transaction-
Date
Account Title and Explanation
Debit
Credit
Mar 1
Treasury Stock
54,880
Cash ( 6810 x $ 8)
54,880
To record the purchase of treasury stock at $8 per share
June 1
Cash
16,680
Treasury Stock (1390 x$8)
11,120
Paid in Capital- Treasury Stock (1390 x $ 4)
5,560
To record the resale of treasury stock at $12 per share
Sep 1
Cash
11,700
Treasury Stock (1170 x$10)
9,360
Paid in Capital- Treasury Stock (1170 x $2))
2,340
To record the resale of treasury stock at $ 10 per share
Dec 1
Cash
7,840
Paid in Capital- Treasury Stock (1120 x $1))
1,120
Treasury Stock
8,960
To record the resale of treasury stock at $ 7 per share
Dec 31
Income Summary
32,320
Retained Earnings
32,320
To close the income summary account and transfer the net income into retained earnings
Date
Account Title and Explanation
Debit
Credit
Mar 1
Treasury Stock
54,880
Cash ( 6810 x $ 8)
54,880
To record the purchase of treasury stock at $8 per share
June 1
Cash
16,680
Treasury Stock (1390 x$8)
11,120
Paid in Capital- Treasury Stock (1390 x $ 4)
5,560
To record the resale of treasury stock at $12 per share
Sep 1
Cash
11,700
Treasury Stock (1170 x$10)
9,360
Paid in Capital- Treasury Stock (1170 x $2))
2,340
To record the resale of treasury stock at $ 10 per share
Dec 1
Cash
7,840
Paid in Capital- Treasury Stock (1120 x $1))
1,120
Treasury Stock
8,960
To record the resale of treasury stock at $ 7 per share
Dec 31
Income Summary
32,320
Retained Earnings
32,320
To close the income summary account and transfer the net income into retained earnings