Jacobsen Corporation had the following stockholders equity accounts on January 1, 2010: Common Stock ($5 par) $500,000,

Question:

Jacobsen Corporation had the following stockholders’ equity accounts on January 1,

2010: Common Stock ($5 par) $500,000, Paid-in Capital in Excess of Par Value $200,000, and Retained Earnings $100,000. In 2010, the company had the following treasury stock transactions.

Mar. 1 Purchased 5,000 shares at $9 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 $6 per share.

Jacobsen Corporation uses the cost method of accounting for treasury stock. In 2010, the company reported net income of $30,000.

Instructions

(a) Journalize the treasury stock transactions, and prepare the closing entry at December 31, 2010, for net income.

(b) Open accounts for

(1) Paid-in Capital from Treasury Stock,

(2) Treasury Stock, and

(3) Retained Earnings. Post to these accounts using J10 as the posting reference.

Common Stock
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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... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...