This exercise will illustrate the use of the cost method of accounting for treasury stock transactions under a variety of price relationships.
Cheers Corporation reported the following stockholders” equity items at December 31, 2013. Each share of stock was issued in a prior year for $12 each.
|
Common Stock. $10 Dar |
$350.000 |
|
Paid-in Capital in Excess of Par Value |
70,000 |
|
Retained Eaminqs |
710.000 |
|
Total stockholders” equity |
$1.130,000 |
During 2014, Cheers had the following treasury stock transactions:
Instructions
Prepare the journal entries for the treasury stock transactions listed above. Apply a FIFO (first-in, first-out) approach in determining the cost of treasury shares sold.
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