Instructions Mystic Lake Inc. bottles and distributes spring water. On July 9 of
ID: 2541288 • Letter: I
Question
Instructions Mystic Lake Inc. bottles and distributes spring water. On July 9 of the current year, Mystic Lake reacquired 38,700 shares of its common stock at $45 per share. On September 22, Mystic Lake sold 33,500 of the reacquired shares at $48 per share. The remaining 5,200 shares were sold at $44 per share on November 23. Required a. Journalize the transactions of July 9, September 22, and November 23. Refer to the Chart of Accounts for exact wording of account titles. b. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year? c. For what reasons might Mystic Lake Inc. have purchased the treasury stock?Explanation / Answer
a. Journalize the transactions of JULY 9, September 22, and November 23
July 9
Dr Treasury stock $1741500 (38700 x $45)
Cr Cash $1741500
September 22
Dr Cash $1608000 (33500 x $48)
Cr Treasury stock $1507500(33500 x $45)
Cr Paid-In Capital from Sale of Treasury Stock $100500(33500 x $3)
November 23
Dr Cash $228800 (5200 x $44)
Dr Paid-In Capital from Sale of Treasury Stock $5200(5200x$1)
Cr Treasury stock $234000 (5200 x $45) .
B.paid-in capital from sale of the treasury stock on Dec 31
$95,300(100500 - 5200).
C.Reasons that support decision from given
to support the market price of stock
the company wishes to increase the par value of its share
for reissuance to employee as a bonus according to stock purchase agreement.