In 2020, Hobbs Corp. acquired 15,000 shares of its own $1 par value common stock at $18 per share. In 2021, Hobbs issued 10,000 of these shares at $25 per share. Hobbs uses the cost method to account for its treasury stock transactions. What accounts and what amounts should Hobbs credit in 2021 to record the issuance of the 10,000 shares

Question

Business

Alexus Carney

25 July, 03:18

In 2020, Hobbs Corp. acquired 15,000 shares of its own $1 par value common stock at $18 per share. In 2021, Hobbs issued 10,000 of these shares at $25 per share. Hobbs uses the cost method to account for its treasury stock transactions. What accounts and what amounts should Hobbs credit in 2021 to record the issuance of the 10,000 shares

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Answers (1)

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Kaylin Howell · Answer 1

b. Treasury stock = $180,000

Additional paid in capital = $70,000

Explanation:

Data provided as per the question below:-

Hobbs shares = 10,000 at $25 shares

Common stock = $18

The Journal entry is shown below:-

Cash

(10,000 * $25) $250,000

Treasury stock

(10,000 * $18) $180,000

Additional paid in capital $70,000

(Being issuance of treasury stock is recorded)

b. Treasury stock = $180,000

Additional paid in capital = $70,000