Question

Land Corporation reported the​ following: Common​ Stock, $5 ​par, 219,000 shares​ authorized, 179,000 shares issued $895,000 Paid in Capital in Excess of Par—Common 206,000 Retained Earnings 232,000 Total​ Stockholders' Equity $1,333,000 Which of the following is included in the entry to record the​ corporation's purchase of 30,000 shares of its common stock for $15 per​ share?

Answer 1

Question Completion with Options:

A. Paid - In Capital from Treasury Stock Transactions is credited for $450,000.

B. Treasury Stock-Common is debited for $150,000.

C. Common Stock-$5.00 Par Value is credited for $300,000.

D. Retained Earnings is debited for $450,000.

Answer:

Land Corporation

The entry that is included to record the​ corporation's purchase of 30,000 shares of its common stock for $15 per​ share is:

B. Treasury Stock-Common is debited for $150,000.

Step-by-step explanation:

a) Data and Calculations:

Common​ Stock, $5 ​par, 219,000 shares​ authorized,

179,000 shares issued $895,000

Paid in Capital in Excess of Par—Common 206,000

Retained Earnings 232,000

Total​ Stockholders' Equity $1,333,000

Purchase of 30,000 shares for $15 per share

The journal entries to record this transaction are:

Debit Treasury stock $150,000 ($5 * 30,000)

Debit Paid-in Capital in Excess of Par - Common $300,000 ($10 * 30,000)

Credit Cash $450,000 ($15 * 30,000)

b) The above is used when the par value method of recording the Treasury Stock is applied. When the cost (cash) method is applied, the treasury stock is debited with $450,000 and the cash account is credited with the same amount.