During 2014 the following selected transactions affecting stockholders equity occurred for TARP Corporation: a. Feb. 1 Purchased

Question:

During 2014 the following selected transactions affecting stockholders’ equity occurred for TARP Corporation:
a. Feb. 1 Purchased in the open market 160 shares of the company’s own at $20 cash per share.
b. Jul. 15 Sold 80 of the shares purchased on February 1 for $21 cash per share.
c. Sept. 1 Sold 50 more of the shares purchased on February 1 for $19 cash per share.

Required:
1. Give the indicated journal entries for each of the transactions.
2. What impact does the purchase of treasury stock have on dividends paid?
3. What impact does the sale of treasury stock for an amount higher than the purchase price have on net income and the statement of cash flows?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...