Plover Corporation had the following stockholders' equity accounts on January 1, 2014: Common Stock ($1 par) $400,000,

Question:

Plover Corporation had the following stockholders' equity accounts on January 1, 2014: Common Stock ($1 par) $400,000, Paid-in Capital in Excess of Par-Common Stock $500,000, and Retained Earnings $100,000. In 2014, the company had the following treasury stock transactions.

Mar. 1 Purchased 5,000 shares at $7 per share.

June 1 Sold 800 shares at $10 per share.

Sept. 1 Sold 1,700 shares at $9 per share.

Dec. 1 Sold 1,000 shares at $5 per share.

Plover Corporation uses the cost method of accounting for treasury stock. In 2014, the company reported net income of $80,000.

Instructions

(a) Journalize the treasury stock transactions, and prepare the closing entry at December 31, 2014, for net income.

(b) Open accounts for

(1) Paid-in Capital from Treasury Stock.

(2) Treasury Stock.

(3) Retained Earnings. Post to these accounts using J12 as the posting reference.

Common Stock
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