What would the journal entry look like

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Reference no: EM133265191

Question: You are the auditor performing the year end audit of Mulcahy Corporation.

Mulcahy Corporation is a U.S. publicly traded corporation based in Chicago, Illinois and has a September 30th fiscal year end. Mulcahy Corporation became a publicly traded corporation in 2018 when the company issued 2,600,000 shares of it $1 par value common stock for $15 per share. In January 2022 the board of directors authorized a share repurchase program. The company decided that the stock repurchased would not be retired. In March 2022, the company repurchased 200,000 shares of its common stock for a price of $20 per share. In August 2022, the company decided to reissue 75,000 shares of this common stock for a price of $28 per share. The staff accountant for Mulcahy Corporation has recognized a gain for $8 per share for the reissued stock (total gain of $600,000) in the company's year end income statement as "Other Income". Your manager has assigned you to perform research in the Codification to determine if
this accounting treatment is correct.

Accounting Issue: Did Mulcahy Corporation correctly recognize the gain on the reissuance of the common stock as "Other Income"?

Codification Reference:

Interpretation of the Guidance: Did Mulcahy Corporation correctly recognize the gain on the issuance of the common stock as "Other Income"?

If necessary, what would the journal entry look like so the financial statements are correct as of September 30, 2022? If a journal entry is not required, N/A.

Reference no: EM133265191

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