Answered: On July 1, Skysong, Inc. purchases 430…

On July 1, Skysong, Inc. purchases 430 shares of its $5 par value common stock for the treasury at a cash price of $8 per share. Journalize the treasury stock transaction.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter10: Stockholder's Equity

Section: Chapter Questions

Problem 42BE: Calculating the Number of Shares Issued Castanet Inc. issued shares of its $1. 50 par value common...

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Concept explainers

Stockholder's Equity

The stockholders’ equity (often referred to as the book value of the company) is the number of assets available to the stockholder after its entire liabilities is paid off. The stockholders’ equity is also sometimes referred to as owner's equity. The stockholders’ equity or book value generally includes common stock, treasury stock retained earnings. It is an indicator of a company's financial strength and is an important item on the company's balance sheet.

Question

On July 1, Skysong, Inc. purchases 430 shares of its $5 par value common stock for the treasury at a cash price of $8 per share.

Journalize the treasury stock transaction.

Definition Definition Stock repurchased from the stockholders by the company that once issued it. The repurchase of the stock reduces the stockholder's equity balance on the balance sheet. Treasury stocks are an important constituent of stockholder's equity but do not carry any voting rights.

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