The shareholders’ equity section of Rodman Corporation as of December 31, 2017, follows:
Common stock .................................................$ 80,000
Additional paid-in capital ...................................10,000
Retained earnings ...............................................60,000
Total shareholders’ equity ..............................$150,000
During 2018, the company entered into the following transactions:
1. Purchased 1,000 shares of treasury stock for $60 per share.
2. As part of a compensation package, reissued half of the treasury shares to executives who exercised stock options for $20 per share.
3. Reissued the remainder of the treasury stock on the open market for $66 per share.
a. Provide the journal entries for each transaction, and prepare the shareholders’ equity section of the balance sheet as of December 31, 2018. Rodman Corporation generated $20,000 in net income during 2018 and did not declare any dividends.
b. What portion of the additional paid-in capital account is attributed to treasury stock transactions?