In 2019, Mordica Co. issued 400,000 of its 500,000 authorized shares of 10 par value ordinary shares at 35 per share. In January, 2020, Mordica repurchased 30,000 shares at 30 per share. Assume these are the only share transactions the company has ever had.

Instructions

(a) What are the two methods of accounting for treasury shares?

(b) Prepare the journal entry to record the purchase of treasury shares by the cost method.

(c) 10,000 treasury shares are reissued at 33 per share. Prepare the journal entry to record the reissuance by the cost method.