Morris Butler is a large discount brokerage firm On December 31, 2008, the stockholders equity section of the companys balance sheet indicated that 65,000 shares of the companys common stock were being held as treasury stock This treasury stock had been acquired for $1,950,000 in a single transacti...

a A company will buy back its own stock to reduce the number of s ...

Morris & Butler is a large discount brokerage firm. On December 31, 2008, the stockholders equity section

Question:

Morris & Butler is a large discount brokerage firm. On December 31, 2008, the stockholders’ equity section of the company’s indicated that 65,000 shares of the company’s were being held as treasury stock. This treasury stock had been acquired for $1,950,000 in a single transaction. The company’s has a of $0.10 per share.
Required:
(a) Why do companies sometimes reacquire stock that they have previously issued?
(b) Prepare the journal entry to record the purchase of the treasury stock.
(c) Assume that Morris & Butler sold 2,000 shares of its treasury stock on April 3, 2009, for $35 per share. Prepare the journal entry to record the sale of the treasury stock.
(d) Assume that on May 31, 2009, Morris & Butler sold another 3,000 shares of its treasury stock for $27 per share. Prepare the journal entry to record the sale of the treasury stock.
(e) Why is treasury stock not classiﬁed as an asset?
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... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... 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,...