Part B During 2018, the Nicklaus Corporation participated in three treasury stoc
ID: 2555899 • Letter: P
Question
Part B
During 2018, the Nicklaus Corporation participated in three treasury stock transactions:
On June 30, 2018, the corporation reacquires 160,000 shares for the treasury at a price of $12 per share.
On July 31, 2018, 30,000 treasury shares are reissued at $15 per share.
On September 30, 2018, 30,000 treasury shares are reissued at $10 per share.
Required:
1. Prepare journal entries to record these transactions.
2. Prepare the Nicklaus Corporation shareholders' equity section as it would appear in a balance sheet prepared at September 30, 2018. (Assume net income for the second and third quarter was $2,800,000.)
Explanation / Answer
Answer
Date
No. of treasury shares
Cost
Amount
Additional Paid In Capital
30-Jun-18
160000
$ 12.00
$ 19,20,000.00
31-Jul-18
-30000
$ 12.00
$ (3,60,000.00)
$ 90,000.00
30-Sep-18
-30000
$ 12.00
$ (3,60,000.00)
$ (60,000.00)
TOTAL for Balance Sheet
100000
$ 12.00
$ 12,00,000.00
$ 30,000.00
Date
General Journal
Debit
Credit
30-Jun-18
Treasury Stock
$ 19,20,000.00
Cash
$ 19,20,000.00
31-Jul-18
Cash
$ 4,50,000.00
Treasury Stock
$ 3,60,000.00
Additional Paid In Capital
$ 90,000.00
30-Sep-18
Cash
$ 3,00,000.00
Additional Paid In Capital
$ 60,000.00
Treasury Stock
$ 3,60,000.00
Stockholder's Equity
Common Stock
XXX
Additional Paid In Capital
$ 30,000.00
Retained Earnings
$ 28,00,000.00
Total
$ 28,30,000.00
Less: Treasury Stock
$ 12,00,000.00
Total Stockholder's Equity
$ 16,30,000.00
Date
No. of treasury shares
Cost
Amount
Additional Paid In Capital
30-Jun-18
160000
$ 12.00
$ 19,20,000.00
31-Jul-18
-30000
$ 12.00
$ (3,60,000.00)
$ 90,000.00
30-Sep-18
-30000
$ 12.00
$ (3,60,000.00)
$ (60,000.00)
TOTAL for Balance Sheet
100000
$ 12.00
$ 12,00,000.00
$ 30,000.00