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Question 8BE

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Intermediate Accounting (Kieso)
Found in: Page 811

Short Answer

Sprinkle Inc. has outstanding 10,000 shares of $10 par value common stock. On July 1, 2017, Sprinkle reacquired 100 shares at $87 per share. On September 1, Sprinkle reissued 60 shares at $90 per share. On November 1, Sprinkle reissued 40 shares at $83 per share. Prepare Sprinkle’s journal entries to record these transactions using the cost method.

In Sprinkle Inc.’s book, the treasury stock should be credited with $3,480.

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Step by Step Solution

Meaning of Per Share Price

The term price per share refers to the value of a single share asked by a company to sell shares to its potential investor to collect finance.

Preparing Sprinkle’s journal entries using the cost method

Date

Particular

Folio

Debit USD

$

Credit USD

$

01-07-2017

Treasury Stock (100 $87) A/c Dr.

8,700

To Cash A/c Cr.

8,700

(being treasury stock issue)

01-09-2017

Cash A/c (60 $90) Dr.

5,400

To Treasury Stock (60 $87) A/c Cr.

5,220

To paid-in capital from Cr.

Treasury Stock A/c

180

(being treasury stock credited)

01-11-2017

Cash A/c (40 $83) Dr.

3,320

Paid-in capital from Dr.

Treasury Stock A/c

160

To Treasury Stocks (40 $87) Cr.

3,480

(being treasury stock transferred)

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