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On January 1, 2012, Agassi Corporation had the following stockholders’ equity accounts. Common Stock ($10 par value, 60,000 shares issued and outstanding) …………$600,000 Paid-in Capital in Excess of Par...

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On January 1, 2012, Agassi Corporation had the following stockholders’ equity accounts.
Common Stock ($10 par value, 60,000 shares issued and outstanding) …………$600,000
Paid-in Capital in Excess of Par …………………………………………………...500,000
Retained Earnings …………………………………………………………………620,000
During 2012, the following transactions occurred.
Jan. 15 Declared and paid a $1.05 cash dividend per share to stockholders.
Apr. 15 Declared and paid a 10% stock dividend. The market price of the stock was $14 per share.
May 15 Reacquired 2,000 common shares at a market price of $15 per share.
Nov. 15 Reissued 1,000 shares held in treasury at a price of $18 per share.
Dec. 31 Determined that net income for the year was $370,000.
Accounting
Journalize the above transactions. (Include entries to close net income to Retained Earnings.)
Determine the ending balances for Paid-in Capital, Retained Earnings, and Stockholders’ Equity.
Analysis
Calculate the payout ratio and the return on common stock equity ratio.
Principles
R. Federer is examining Agassi’s financial statements and wonders whether the ?ogains?? or ?olosses?? on Agassi’s treasury stock transactions should be included in income for the year. Briefly explain whether, and the conceptual reasons why, gains or losses on treasury stock transactions should be recorded in income.

Answered Same Day Dec 29, 2021

Solution

Robert answered on Dec 29 2021
107 Votes
CHAPTER 15
ACCOUNTING
January 15, 2012
Retained Earnings ($1.05 X 60,000)
63,000
Cash
63,000
April 15, 2012
Retained Earnings [(10% X 60,000) X $14]
84,000
Share Capital—Ordinary
60,000
Share Premium—Ordinary
24,000
May 15, 2012
Treasury Shares (2,000 X $15)
30,000
Cash
30,000
November 15, 2012
Cash ($18 X 1,000)
18,000
Share Premium—Treasury
3,000
Treasury Shares
15,000
December 31, 2012
Income Summary
370,000
Retained...
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