On December 31, 2020, the records for Lakers Inc. provided the following data on stockholders' equity.

The stockholders vote to retire all of the treasury stock immediately and to purchase for direct retirement another 4,000 shares of common stock currently trading at \(\$ 12.50\) per share.

Required

a. Provide the journal entry for the purchase and immediate retirement of the 4,000 shares of outstanding common stock.

b. Provide the journal entry for the retirement of all of the remaining treasury shares.

c. Assume instead for part

(a) that the company holds the 4,000 shares in the treasury rather than retiring immediately. Record the journal entry and indicate how stockholders' equity is impacted. Is the impact on stockholders' equity different if the shares were immediately retired?

Transcribed Image Text:

Common stock, $10 par, 30,000 shares issued $300,000 Additional paid-in capital on common stock, $0.30 per share Treasury stock, 3,000 shares (cost $9.80 per share). 9,000 29,400