# Another Accounting question?

ise 11.9

Nicole Johnson

5 stars

Johnston, Inc., engaged in the following transactions involving treasury stock: Feb. 10 - Purchased for cash 17,000 shares of treasury stock at a price of \$25 per share. June 4 - Reissued 6,000 shares of treasury stock at a price of \$33 per share. Dec. 22 - Reissued 4,000 shares of treasury stock at a price of \$22 per share. a. Prepare general journal entries to record these transactions. b. Compute the amount of retained earnings that should be restricted because of the treasury stock still owned at December 31. c. Does a restriction on retained earnings affect the dollar amount of retained earnings reported in the balance sheet?

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• JKRB
Lv 7
7 years ago

a. Prepare general journal entries to record these transactions.

Feb. 10 - Purchased for cash 17,000 shares of treasury stock at a price of \$25 per share.

Dr Treasury Stock 425,000

Cr Cash 425,000

June 4 - Reissued 6,000 shares of treasury stock at a price of \$33 per share.

6,000 x 33 = \$198,000 total cash received

6,000 x 25 = \$150,000 cost

Dr Cash 198,000

Cr Treasury Stock 150,000

Cr Paid-in Capital from Sale of Treasury Stock 48,000

Dec. 22 - Reissued 4,000 shares of treasury stock at a price of \$22 per share.

4,000 x 22 = \$88,000 cash received

4,000 x 25 = \$100,000 cost

Dr Cash 88,000

Dr Paid-in Capital from Sale of Treasury Stock 12,000

Cr Treasury Stock 100,000

b. Compute the amount of retained earnings that should be restricted because of the treasury stock still owned at December 31.

425,000 - 150,000 - 48,000 + 12,000 - 100,000 = \$139,000

c. Does a restriction on retained earnings affect the dollar amount of retained earnings reported in the balance sheet?

No, restrictions on retained earnings are normally reported in notes to the financial statements.

Source(s): Accounting Fan
• Pamela
Lv 4
4 years ago