The following excerpt is from an article reported in the April 27, 2011, online issue of Reuters.
DuPont Co ( DD.N ) said its board of directors has authorized a $2 billion stock repurchase plan to offset dilution from executive compensation. The par amount per share for DuPonts common stock is $.30. Paid-in capital excess of par is $9.19 per share on average. The market price was $55 on April 9, 2011.
1. Suppose DuPont reacquires 36 million shares through repurchase on the open market at $55 per share. Prepare the appropriate journal entry to record the purchase. DuPont considers the shares it buys back to be treasury stock.
2. Suppose DuPont considers the shares it buys back to be retired rather than treated as treasury stock. Prepare the appropriate journal entry to record the purchase. (If no entry is required for a particular event, select "No journal entry required" in the first account field. Enter your answers in millions and rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50).)