Gentry Corporation had the following stockholders' equity accounts on January 1, 2010: Common Stock ($1 par) $400,000, Paid-in Capital in Excess of Par Value $500,000, and Retained Earnings $100,000. In 2010, 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.
Gentry Corporation uses the cost method of accounting for treasury stock. In 2010, the company reported net income of $80,000.
Instructions
(a) Journalize the treasury stock transactions, and prepare the closing entry at December 31, 2010, for net income.
(b) Open accounts for
(1) Paid-in Capital from Treasury Stock,
(2) Treasury Stock, and
(3) Retained Earnings. Post to these accounts using J12 as the posting reference.
(c) Prepare the stockholders' equity section for Gentry Corporation at December 31, 2010.