1.
fecther
Fechter Corporation had the following stockholders' equity accounts on January 1, 2017:
Common Stock ($5 par) $500,000. Paid-in Capital in Excess of Par-Common Stock $200,000.
and Retained Earnings $100,000. In 2017, the company had the following treasury stock
transactions. Fechter Corporation uses the cost method of accounting for treasury stock. In 2017,
the company reported net income of $30,000. (a) Journalize the treasury stock transactions, and
prepare the closing entry at December 31, 2017, for net income.
Solution
Date Particulars Debit $ Credit $ 01-Mar Treasury stock         40,000 Cash
        40,000 (To record purchase of treasury stock) 01-Jun Cash
        12,000 Treasury stock           8,000 Paid in capital
          4,000 (To issue treasury stock) 01-Sep Cash         20,000
Treasury stock         16,000 Paid in capital           4,000 (To
issue treasury stock) 01-Dec Cash           7,000 Discount on issue
          1,000 Treasury stock           8,000 (To issue treasury
stock)