Logout Open In App
Open In App
Warning: foreach() argument must be of type array|object, bool given in /var/www/html/web/app/themes/studypress-core-theme/template-parts/header/mobile-offcanvas.php on line 20

Chapter 15: Question 9BE (page 811)

Arantxa Corporation has outstanding 20,000 shares of \(5 par value common stock. On August 1, 2017, Arantxa reacquired 200 shares at \)80 per share. On November 1, Arantxa reissued the 200 shares at $70 per share. Arantxa had no previous treasury stock transactions. Prepare Arantxa’s journal entries to record these transactions using the cost method.

Short Answer

Expert verified

In the books of Arantxa, Corporation treasury stock should be credited with $16,000.

Step by step solution

01

Meaning of Outstanding Shares

The termoutstanding shares refers to the actualnumber of sharesof a company outstanding in the market and holding by its shareholders at a given point in time.

02

Preparing Sprinkle’s Journal Entries using Cost Method

Date

Particular

Folio

Debit USD

$

Credit USD

$

01-08-2017

Treasury Stock (200$80) A/c Dr.

16,000

To Cash A/c Cr.

16,000

(being treasury stock issued)

01-11-2017

Cash (200$70) A/c Dr.

14,000

Retained Earnings A/c. Dr.

2,000

To Treasury Stock A/c Cr.

16,000

(being treasury stock transferred)

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Briefly describe some of the similarities and differences between GAAP and IFRS with respect to the accounting for stockholders’ equity.

For what reasons might a company restrict a portion of its retained earnings?

Ravonette Corporation issued 300 shares of \(10 par value common stock and 100 shares of \)50 par value preferred stock for a lump sum of \(13,500. The common stock has a market price of \)20 per share, and the preferred stock has a market price of $90 per share. Prepare the journal entry to record the issuance.

(Equity Items on the Balance Sheet) The following are selected transactions that may affect stockholders’ equity.

  1. Recorded accrued interest earned on a note receivable.
  2. Declared a cash dividend.
  3. Declared and distributed a stock split.
  4. Approved a retained earnings restriction.
  5. Recorded the expiration of insurance coverage that was previously recorded as prepaid insurance.
  6. Paid the cash dividend declared in item 2 above.
  7. Recorded accrued interest expense on a note payable.
  8. Declared a stock dividend.
  9. Distributed the stock dividend declared in item 8.

Instructions

In the following table, indicate the effect each of the nine transactions has on the financial statement elements listed. Use the following code: I = Increase, D = Decrease, NE = No effect.

Item

Asset

Liabilities

Stockholders’ Equity

Paid-in Capital

Retained

Earnings

Net Income

Sprinkle Inc. has outstanding 10,000 shares of \(10 par value common stock. On July 1, 2017, Sprinkle reacquired 100 shares at \)87 per share. On September 1, Sprinkle reissued 60 shares at \(90 per share. On November 1, Sprinkle reissued 40 shares at \)83 per share. Prepare Sprinkle’s journal entries to record these transactions using the cost method.
See all solutions

Recommended explanations on Business Studies Textbooks

Human Resources

Read Explanation

Introduction to Business

Read Explanation

Influences On Business

Read Explanation

Organizational Communication

Read Explanation

Business Case Studies

Read Explanation

Actuarial Science in Business

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free