Question

Johannesburg Company has the following [in rands (R), the South African unit of currency]:
Common stock, 2,000,000 shares, R3 par value ......... R 6,000,000
Paid-in capital in excess of par ............... 34,000,000
Total paid-in capital .................... 40,000,000
Retained income ...................... 18,000,000
Stockholders’ equity ...................R58,000,000
Overall market value of stock @ assumed market price of
R40 per share ....................... R80,000,000
Book value per share = R58,000,000 ÷ 2,000,000 = R29
1. The company used cash to reacquire 150,000 shares for R40 each and held them in the treasury. Prepare the stockholders’ equity section after the acquisition of treasury stock. Also prepare the journal entry.
2. Suppose all the treasury stock is sold for R50 per share. Prepare the journal entry.
3. Suppose all the treasury stock is sold for R30 per share. Prepare the journal entry.
4. Recalculate book value after each preceding transaction.



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  • CreatedFebruary 20, 2015
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