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Chapter 15: Question 9BE (page 811)

Arantxa Corporation has outstanding 20,000 shares of \(5 par value common stock. On August 1, 2017, Arantxa reacquired 200 shares at \)80 per share. On November 1, Arantxa reissued the 200 shares at $70 per share. Arantxa had no previous treasury stock transactions. Prepare Arantxa鈥檚 journal entries to record these transactions using the cost method.

Short Answer

Expert verified

In the books of Arantxa, Corporation treasury stock should be credited with $16,000.

Step by step solution

01

Meaning of Outstanding Shares

The termoutstanding shares refers to the actualnumber of sharesof a company outstanding in the market and holding by its shareholders at a given point in time.

02

Preparing Sprinkle’s Journal Entries using Cost Method

Date

Particular

Folio

Debit USD

$

Credit USD

$

01-08-2017

Treasury Stock (200$80) A/c Dr.

16,000

To Cash A/c Cr.

16,000

(being treasury stock issued)

01-11-2017

Cash (200$70) A/c Dr.

14,000

Retained Earnings A/c. Dr.

2,000

To Treasury Stock A/c Cr.

16,000

(being treasury stock transferred)

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