sam boyer acc 291 week 6.2

sam boyer acc 291 week 6.2 - Running head STOCKS AND...

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Running head: STOCKS AND TRANSACTIONS 1 Stocks and Transactions Samatha Boyer Acc/291 1/25/2015 Tameka Johnson
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STOCKS AND TRANSACTIONS 2 Stocks and Transactions At the time of the purchase, Chen Inc. purchases 1,000 shares of its own at $5.00 per stock. The total amount calculating to be $12,000. Treasury stock and cash would be debited $12,000. When a company holds a treasury stock, the balance will then exist in a general ledger. Since cash is an asset, there would not be an effect on the net income. The company’s total assets would decrease by $12,000. Leading to not having an effect on the total paid in capital either.
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Unformatted text preview: The total stockholder equity would then decrease. At this point, the treasury stock has now been resold by Chen Inc. Cash is then debited in the amount of $15,000. However, treasury stock is credited for the amount of $12,000. This leaves the excess amount to be $3000. The excess amount will then be credited to the paid in capital from treasury stock. This transaction has no effect on the net income. The total assets were actually increased in the amount of $15,000. The total of the paid in capital is increased by $3000. Leaving an increase in the amount of $12,000 in the stockholders equity....
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