Greeve Corporation had the following equity accounts on January 1, 2011; Share Capital-Ordinary ($1 par) $400,000. Share

Question:

Greeve Corporation had the following equity accounts on January 1, 2011; Share Capital-Ordinary ($1 par) $400,000. Share Premium-Ordinary $500,000, and Retained Earnings $100,000. In 2011, the company had the following treasury share transactions.

Mar. 1 Purchased 5,000 shares at $7 per share.

June 1 Sold 1,000 shares at $10 per share.

Sept. 1 Sold 2,000 shares at $9 per share.

Dec, 1 Sold 1,000 shares at $5 per share.

Greeve Corporation uses the cost method of accounting for treasury shares. In 2011, the company reported net income of 560,000.

Instructions

(a) Journalize the treasury share transactions, and prepare the closing entry at December 31, 2011, for net income.

(b) Open accounts for

(1) Share Premium-Treasury.

(2) Treasury Shares,

(3) Retained Earnings. Post to these accounts using J12 as the posting reference.

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...