$4.$ Prepare journal entries $(1,2,$ and $4)$ and show proper disclosure $(3)($Stockholders Equity

Section of B$/$S$)$ to reflect the following treasury stock transactions showing how each is

accounted for under the cost method. $($Show computations.$)$

$(20$ Points$)$

Common Stock $$10$ Par Authorized $1,000,000$ shares issued

and outstanding $600,000$

Paid in capital in excess of par

Retained Earnings

$$6,000,000$

$1,500,000$

$3,250,000$

A$.$ On January $4,2015,$ having idle cash, Carey Co$.$ repurchased $25,000$ shares of its

out$-$standing stock for $$500,000.$

B$.$ On March $4,$ Carey sold $5,000$ of these reacquired shares at $$24$ per share.

B$.$ Show the proper disclosures in the stockholders' equity section of the balance sheet

issued at the end of the first quarter, March $31,2015.$ Assume net income of

$$100,000$ during the first quarter.

D$.$ On June $30,2015$ the firm sold $10,000$ of the reacquired shares for $$17$ per share.

$5.($Entries for Zero$-$Interest$-$Bearing Debt$)$ On January $1,2014,$ Fisher Company makes

the two following acquisitions.

$(20$ Points$)$

A$.$ Purchases land having a fair market value of $$800,000$ by issuing a $5-$year, zero$-$

interest$-$bearing promissory note in the face amount of $$1,175,464.$

B$.$ Purchases equipment by issuing a $4\%,8-$year promissory note having a maturity

value of $$350,000($interest payable annually$).$ The company has to pay $8\%$ interest

for funds from its bank.

Instructions

$($a$)$ Record the two journal entries that should be recorded by Fisher Company for the two

purchases on January $1,2014.$

$($b$)$ Record the interest at the end of the first two years on both notes using the effective$-$

interest method.