ch11 notes - c CREDIT treasury stock 1,600 – always...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 11 Notes. I. Treasury Stock – issued stock that has been subsequently reacquired by the corporation a. Why would a company buy its own stock? i. Stock is selling for a low price is a good buy ii. To avoid a hostile takeover – to maintain ownership of company iii. To fund employee stock options/profit sharing or bonus plans iv. To maintain a strong market for its stock or to stimulate trading b. Treasury stock is shown as a a reduction in total stockholders equity on the Balance Sheet c. Accounting for Treasury Stock i. Ignore par value for treasury stock transactions 1. DEBIT treasury stock for $$ (number of shares X purchase price) 2. CREDIT Cash for $$ 3. difference in issued and outstanding is the treasury stock 4. total paid in capital and retained earnings – treasury stock = total stockholder’s equity ii. Selling Treasury Stock at Cost 1. On October 1, 2009, Saturn Company sold 200 shares of the Treasury stock for $1,600 a. $1.600 / 200 shares = $8 per share b. DEBIT Cash 1,600
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: c. CREDIT treasury stock 1,600 – always maintained at cost i. These shares will become part of outstanding shares now that they aren’t treasury shares anymore iii. Selling Treasury Stock Above Cost 1. On October 15, 2009, Saturn Company sold 400 shares of treasury stock for $4,000 a. $4,000 / 400 Shares = $10 per share b. DEBIT cash 4,000 c. CREDIT treasury stock for 3,200 (400 shares X $8) d. CREDIT PIC from sale of treasury stock i. We don’t credit a gain from sale iv. Selling Treasury Stock below Cost 1. On October 30, 2009, Saturn Company sold the remaining 400 shares of the treasury stock for $2,000. a. $2,000 / 400 shares = $5 per share b. DEBIT cash 2,000 c. CREDIT treasury stock for 3,200 (400 shares X $8) d. CREDIT PIC from sale of treasury stock 800 i. Take as much as you can from PIC, and the remaining balance from another account e. CREDIT Retained Earnings 400 i. Take the remaining balance from RE...
View Full Document

This note was uploaded on 02/09/2012 for the course ACCT 1310 taught by Professor Staff during the Fall '10 term at Texas State.

Page1 / 2

ch11 notes - c CREDIT treasury stock 1,600 – always...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online