On 3/1/14 Fox Corp bought back 1,000 shares of their common stock for $15 per share. There were no shares in the treasury prior to that. On 5/23/14 they sold 200 of those shares for $17 each. On 6/19/14 they sold another 400 shares of those shares for $10 per share. Consider writing out all of your entries on scratch paper to assist you in answering questions 31 and 32. What will the remaining balance in the treasury stock account be after all of the above transactions have been recorded

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ogbe2k3 ogbe2k3 · Answer 1 · 2020-05-18T03:24:04+02:00

Answer:

For question (31) $ 6000 (32) The net impact on retained earning is 1600 (Which is a negative

Explanation:

Question 31

No. Rate Value

Purchase of Treasury Stock 1000 15 15000

Less: Sold on 5/23/14 200 15 3000

Less: Sold on 6/19/14 400 15 6000

Net remaining value 6000

Note: to calculate the closing value of treasury stock, rate of selling stock need to be taken same as of date of purchase.

For question 31 the answer is $ 6000

Question 32

Impact on retained earning on first sale

No. Rate Value

Sale VALUE 200 17 3400

Less: Purchase of Treasury Stock 200 15 3000

Credit Retained earning 400

Impact on retained earning on second sale

No. Rate Value

Sale VALUE 400 10 4000

Less: Purchase of Treasury Stock 400 15 6000

Debit Retained earning -2000

Net Impact on retained earning 1600 (Negative i.e. Debit)

Therefore the remaining balance in the treasury stock account be after all of the above transactions have been recorded is $6000

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