Reconstructing transactions involving shareholders' equity. Shea Company began business on January 1. Its balance sheet on December 31 contained the shareholders' equity section shown in Exhibit 14.8. During the year, Shea Company engaged in the following transactions:

(1) Issued shares for $34) each.

(2) Acquired a block of 2.000 shares for the treasury in a single transaction.

(3) Reissued some of the treasury shares.

(4) Sold for $12,000 securities available for sale that had originally cost $14,000. At the end of the year, securities available for sale, still on hand, that had originally cost $25,000 had a fair value of $18,000.

Assuming that these were the only common stock transactions during the year and that the firm used the cost method to account for treasury stock transactions, answer the following questions:

a. How many shares did Shea Company issue for $30 each?

b. What was the price at which it acquired the treasury shares?

c. How many shares did it reissue from the block of treasury shares?

d. What was the price at which it reissued the treasury shares?

e. What journal entries did it make during the year for items (1)10 (4)?

f. In which statement or statements will Shea Company report the various gains and losses on its holdings of securities available forsale?

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Shareholders' Equity (Problem 32) EXHIBIT 14.8 as of December 31 Common Stock ($5 par value) Additional Paid-In Capital Retained Earnings Less Unrealized Holding Loss on Securities Available for Sale Less 1,200 Shares Held in Treasury-At Cost.. Total Shareholders Equity $100,000 509,600 50,000 (7,000) (33,600) ..... .. $619,000