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30 June, 02:05

Biscayne Bay Water Inc. bottles and distributes spring water. On May 14 of the current year, Biscayne Bay Water Inc. reacquired 24,200 shares of its common stock at $68 per share. On September 6, Biscayne Bay Water Inc. sold 12,500 of the reacquired shares at $74 per share. The remaining 11,700 shares were sold at $65 per share on November 30.

Required:

A. Journalize the transactions of May 14, September 6, and November 30. Refer to the Chart of Accounts for exact wording of account titles.

B. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year?

C. Where will the balance in Paid-In Capital from Sale of Treasury Stock be reported on the balance sheet?

D.

For what reasons might Biscayne Bay Water Inc. have purchased the treasury stock?

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Answers (1)
  1. 30 June, 05:30
    0
    treasury stock 1,645,600 debit

    cash 1,645,600 credit

    --to record he purchase of TS--

    cash 925,000 debit

    treasury stock 850,000 debit

    additional paid-in TS 75,000 debit

    -to record sale of TS above their cost--

    cash 760,500 debit

    additional paid-in TS 35,100 debit

    Treasury Stock 795,600 credit

    Explanation:

    treasury stock cost:

    24,200 shares x $68 each = 1,645,600

    sale of TS

    proceeds: 12,500 x $74 = 925,000

    cost: 12,500 x $68 = 850,000

    additional paid-in TS 75,000

    second sale of TS:

    proceeds _ 11,700 x $65 760,500

    Cost: 11,700 x $68 795,600

    additional paid-in TS 35,100
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