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How create stockholders equity section of the balance sheet

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Reference no: EM132772585

Treasury Stock: Par Value and Cost Methods

The stockholders' equity of Thomas Company as of December 31, 2012, was as follows:

Common stock, $1 par, authorized 275,000 shares;

240,000 shares issued and outstanding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 240,000

Paid-in capital in excess of par. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,840,000

Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900,000

On June 1, 2013, Thomas reacquired 15,000 shares of its common stock at $16. The following transactions occurred in 2013 with regard to these shares.

July 1, Sold 5,000 shares at $20.

Aug. 1, Sold 7,000 shares at $14.

Sept. 1, Retired 1,000 shares.

Problem 1. Using the cost method to account for treasury stock:

(a) Prepare the journal entries to record all treasury stock transactions in 2013.

(b) Prepare the Stockholders' Equity section of the balance sheet at December 31, 2013, assuming Retained Earnings of $1,005,000 (before the effects of treasury stock transactions).

Problem 2. Using the par value method to account for treasury stock:

(a) Prepare the journal entries to record all treasury stock transactions in 2013.

(b) Prepare the Stockholders' Equity section of the balance sheet at December 31, 2013, assuming Retained Earnings of $1,005,000 (before the effects of treasury stock transactions).

Reference no: EM132772585

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