Ray Holt Corporation has retained you as a consultant on accounting policies and procedures. During $2019,$ the company engaged in a number of treasury stock transactions, having foreseen an opportunity to report its treasury stock as an asset and to recognize a profit in trading its own stock. The transactions were as follows:

$1.$ Reacquired $100$ shares of its $$10$ par common stock at $$20$ per share. The shares had originally been issued at $$23$ per share.

$2.$ Reacquired $150$ shares of its $$10$ par common stock at $$24$ per share. The shares had originally been issued at $$23$ per share.

$3.$ Reacquired $50$ shares of its $$100$ par preferred stock at $$140$ per share. The shares had originally been issued at $$170$ per share.

$4.$ Sold all common treasury shares held at $$25$ per share.

$5.$ Reacquired $150$ shares of its $$100$ par preferred stock at $$130$ per share. The shares had originally been issued at $$170$ per share.

$6.$ Retired all preferred shares held in the treasury.

Required:

$1.$ Next Level Is the corporation correct in assuming that its treasury stock is an asset and that it can recognize a profit or gain from its treasury stock transactions? Explain.

$2.$ Next Level Prepare an analysis of treasury stock accounting for Mr$.$ Robert Richter, the controller. This analysis should contain proper journal entries for each of the treasury stock transactions occurring during $2019,$ prepared using the cost method discussed in the chapter.

$3.$ Next Level Conclude the analysis by discussing how $$gains$$ on treasury stock are reported and how treasury stock is reported on a corporation$$s balance sheet.