Treasury Stock Transactions The Stockholders’ Equity category of Little Joe’s balance sheet on January 1, 2008, appeared as follows:

The following transactions occurred during 2008:

a. Reacquired 5,000 shares of common stock at $20 per share on February 1.

b. Reacquired 1,200 shares of common stock at $13 per share on March 1.
Required 1. Record the entries in journal form.
2. Assume that the treasury stock was reissued on October 1 at $12 per share. Did the company benefit from the treasury stock reissuance? Where is the “gain” or “loss” presented on the financial statements?
3. What effect did the two transactions to purchase treasury stock and the later reissuance of that stock have on the Stockholders’ Equity section of the balance sheet?

Transcribed Image Text:

Common stock, $5 par, 40,000 shares issued and outstanding Additional paid-in capital Retained earnings Total stockholders' equity $200,000 90,000 100,000 $390,000