Fechter Corporation had the following stockholders' equity accounts on January 1, 2019: Common Stock ($5 par) $500,000,

Question:

Fechter Corporation had the following stockholders' equity accounts on January 1, 2019: Common Stock ($5 par) $500,000, Paid-in Capital in Excess of Par-Common Stock $200,000, and Retained Earnings $100,000. In 2019, the company had the following treasury stock transactions.

Mar. 1 Purchased 5,000 shares at $8 per share.

June 1 Sold 1,000 shares at $12 per share.

Sept. 1 Sold 2,000 shares at $10 per share.

Dec. 1 Sold 1,000 shares at $7 per share.

Fechter Corporation uses the cost method of accounting for treasury stock. In 2019, the company reported net income of $30,000.

Instructions

(a) Journalize the treasury stock transactions, and prepare the closing entry at December 31, 2019, for net income.

(b) Open accounts for (1) Paid-in Capital from Treasury Stock, (2) Treasury Stock, and (3) Retained Earnings. (Post to T-accounts.)

(c) Prepare the stockholders' equity section for Fechter Corporation at December 31, 2019.

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...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Accounting Principles

ISBN: 978-1118875056

12th edition

Authors: Jerry Weygandt, Paul Kimmel, Donald Kieso

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