What is final account balance for the Paid-in Capital in Excess of Cost-Treasury Stock account? Exercise 2:

What is final account balance for the Paid-in Capital in Excess of Cost-Treasury Stock account?

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Exercise 2: Treasury Stock When a company decides to re-purchase its own shares from the marketplace, these shares are recorded as Treasury Stock on the company's books. The Treasury Stock account is a contra-Equity account so it increases on the debit side. The company may later re-sell the stock to the marketplace. If it does, it cannot record any gains or losses on the sale. Instead, these amounts are recorded to the Paid-In Capital in Excess of Cost account. Recording these gains or losses to the Paid-In Capital account (recorded on the Balance Sheet) instead of a gain/loss account (recorded on the Income Statement) reduces the incentive for a company to speculate in the buying and selling of it's own stock. The "Cost Method" which ignores Par Value is used to record Treasury Stock transactions. Review the completed example below: 1) Lawson Corporation re-purchased 1,000 shares of $5 par value common stock for $10 per share. 2) Lawson later sold 100 shares of its treasury stock for $12 per share. 3) A few weeks later, Lawson sold 100 more shares of its treasury stock for $9 per share. Paid-in Capital in Excess of Cost- Cash Treasury Stock Treasury Stock 10,000(1) 10,000(1) 1,000(2) 200 (2) 1,200 (2) 900 (3) 1,000(3) 100 (3) 8000 bal 100 bal NOTE: Treasury Stock is a contra-equity account. Next, use the t-accounts below to record the following Treasury Stock transactions for Kramer Corp: 1) Kramer Corporation re-purchased 400 shares of $1 par value common stock for $8 per share. 2) Kramer later sold 80 shares of its treasury stock for $10 per share. 3) A few weeks later, Kramer sold 30 more shares of its treasury stock for $6 per share. Paid-in Capital in Excess of Cost- Treasury Stock Cash Treasury Stock bal bal Exercise 2: Treasury Stock When a company decides to re-purchase its own shares from the marketplace, these shares are recorded as Treasury Stock on the company's books. The Treasury Stock account is a contra-Equity account so it increases on the debit side. The company may later re-sell the stock to the marketplace. If it does, it cannot record any gains or losses on the sale. Instead, these amounts are recorded to the Paid-In Capital in Excess of Cost account. Recording these gains or losses to the Paid-In Capital account (recorded on the Balance Sheet) instead of a gain/loss account (recorded on the Income Statement) reduces the incentive for a company to speculate in the buying and selling of it's own stock. The "Cost Method" which ignores Par Value is used to record Treasury Stock transactions. Review the completed example below: 1) Lawson Corporation re-purchased 1,000 shares of $5 par value common stock for $10 per share. 2) Lawson later sold 100 shares of its treasury stock for $12 per share. 3) A few weeks later, Lawson sold 100 more shares of its treasury stock for $9 per share. Paid-in Capital in Excess of Cost- Cash Treasury Stock Treasury Stock 10,000(1) 10,000(1) 1,000(2) 200 (2) 1,200 (2) 900 (3) 1,000(3) 100 (3) 8000 bal 100 bal NOTE: Treasury Stock is a contra-equity account. Next, use the t-accounts below to record the following Treasury Stock transactions for Kramer Corp: 1) Kramer Corporation re-purchased 400 shares of $1 par value common stock for $8 per share. 2) Kramer later sold 80 shares of its treasury stock for $10 per share. 3) A few weeks later, Kramer sold 30 more shares of its treasury stock for $6 per share. Paid-in Capital in Excess of Cost- Treasury Stock Cash Treasury Stock bal bal

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