A company has 10,000 shares of $10 par common stock outstanding. Prepare entries to record the following: (a) Purchased 1,500 shares of treasury stock at $16. The treasury stock is accounted for by the cost method. There were no previous purchases of treasury shares. (b) Sold 1,000 shares of treasury stock at $19. (c) Purchased equipment for $80,000, paying $25,000 in cash and issuing 4,000 shares of common stock for the remaining. (d) Sold 500 shares of treasury stock at $14.

Treasury Stock 24,000

Cash 24,000

to record puchase of own shares (A)

Cash 19,000

Threasury Stock 16,000

Additional Paid-in TS 3,000

to record reissued shares aboe their price (B)

equipment 80,000

Cash 25,000

Common Stock 40,000

Additional Paid-in 15,000

to record purchase of equipment (C)

Cash 7,000

Additional Paid-in TS 1,000

Treasury Stock 8,000

to record reissued shares below their price (D)

Explanation:

(A) under cost method, treasury stock enter the accounting at their cost.

Inthis case is 1,500 shares times $16

(B) When reissued above their cost the shares will generate a additional paid in

Cost:

1,000 shares x $16 = 16,000

Sales price:

1,000 shares x $19 = 19,000

Difference:

19,000 - 16,000 = 3,000

(C) The equipment enter the accounting for his cost. Because, the face value of the stock is not enought for the equipment, we recognize an additional paid-in

equipment 80,000

cash (25,000)

common stock

4,000 x 10 (40,000)

Subtotal 15,000

To cover this we use the additional paid-in

(D) We decrease the additional paid-in for the diference between cash proceeds and the treasury stock:

cash 14 x 500 = 7,000

Ts 16 x 500 = (8,000)

We decrease the previous additional paid-in TS declare on (B)