Reference no: EM13505854
The Spivak Company was involved in the following treasury stock transactions during 2011;
a. Purchased 80,000 shares of its $1 par value common stock on the market for $2.50 per share.
b. Purchased 16,000 shares of its $1 par value common stock on the market for $2.80 per share.
c. Sold 44,000 share purchased in a for $131,000.
d. Sold the other 36,000 shares purchased in a for $72,000.
e. Sold 6,000 of the remaining shares of treasury stock for $1.60 per share.
f. retired all the remaining shares of treasury stock. All shares originally were issued at $1.50 per share.
Required
1. Record the treasury stock transactions in T accounts.
2. What is the reasoning behind treating the purchase of treasury stock as a reduction in stockholders' equity as opposed to treating it as an investment asset?
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