The Stockholders' Equity category of Little Joe's balance sheet on January 1, 2016, appeared as follows:
Little Joe's
Partial Balance Sheet
January 1, 2016
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Stockholders' equity:
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Common stock, $5 par, 50,000 shares issued and outstanding
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250,000.00
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Additional paid-in capital
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112,500.00
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Retained earnings
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80,000.00
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Total stockholders' equity
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$442,500.00
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The following transactions occurred during 2016:
a. Reacquired 6,250 shares of common stock at $22 per share on February 1.
b. Reacquired 1,500 shares of common stock at $15 per share on March 1.
Required:
1. Record the entries in journal form.
2. Assume that the treasury stock was reissued on October 1 at $14 per share. Did the company benefit from the treasury stock reissuance? Where is the ‘‘gain'' or ‘‘loss'' presented on the financial statements?
Did the company benefit from the treasury stock reissuance? (A) Yes, (B) No
Where is the ‘‘gain'' or ‘‘loss'' presented on the financial statements?
(A) Income statement and balance sheet, (B) Balance sheet only
3. What effect did the two transactions to purchase treasury stock and the later reissuance of that stock have on the Stockholders' Equity section of the balance sheet?