The stockholders' equity section of Carey Co.'s balance sheet at December 31, 2010, was as follows: Common stock--$10 par (authorized 1,000,000 shares, issued and outstanding 600,000 shares) $ 6,000,000, Paid-in capital in excess of par 1,500,000, Retained earnings 3,250,000, total $10,750,000. Instructions Prepare journal entries (1, 2, and 4) and show proper disclosure (3) to reflect the following treasury stock transactions showing how each is accounted for under the cost method. (Show computations.)
1. On January 4, 2011, having idle cash, Carey Co. repurchased 25,000 shares of its out-standing stock for $500,000.
2. On March 4, Carey sold 5,000 of these reacquired shares at $24 per share.
3. Show the proper disclosures in the stockholders' equity section of the balance sheet issued at the end of the first quarter, March 31, 2011. Assume net income of $100,000 during the first quarter.
4. On June 30, 2011 the firm sold 10,000 of the reacquired shares for $17 per share.