Problem: Greeve Corporation had the following stockholders' equity accounts on January 1, 2006: Common Stock ($1 par) $400,000. Paid-in Capital in Excess of Par Value $500,000. and Retained Earnings $100,000. In 2006, the company had the following treasury stock transactions.
Mar. 1 Purchased 5,000 shares at $7 per share.
June 1 Sold 1,000 shares at $10 per share.
Sept. 1 Sold 2,000 shares at $9 per share.
Dec. 1 Sold 1.000 shares at $5 per share.
Greeve Corporation uses the cost method of accounting for treasury stock. In 2006, the company reported net income of $60,000.
Instructions:
(a) Journalize the treasury stock transactions, and prepare the closing entry at December 31. 2006, for net income.
(b) Open accounts for (1) Paid-in Capital from lteasury Stock, (2) Reasury Stock, and (3) Re-tained Earnings. Post to these accounts using J12 as the posting reference.
(c) Prepare the stockholders' equity section for Greeve Corporation at December 31,2006.