20) Why do corporations purchase and own treasury stock? 21) Team Shirts had 25,000 shares of $1.00 par value common stock outstanding. It bought back 500 shares for $15.50 in the stock market to...

20) Why do corporations purchase and own treasury stock?

21) Team Shirts had 25,000 shares of $1.00 par value common stock outstanding. It bought back 500 shares for $15.50 in the stock market to use for employee bonuses. On December 10, Team Shirts gave 250 shares to its employees as holiday bonuses. On December 31:

1. How many shares are outstanding?

2. How many shares are still held as treasury stock?

22) Anika Braun, owner and CEO of Braun’s Sports Den, believes that the corporation has too many shares outstanding. She is worried that a Japanese company will buy the shares and take over the business. Her accountant has suggested that Braun’s Sports Den buy treasury stock. Explain to Anika why buying treasury stock may be an option.

23) On October 15, Manx Company bought 400 shares of its own stock for $16 per share. Show how this transaction affects the accounting equation. Include both account titles and amounts.

Shareholders' equity

24) On October 15, Manx Company bought 400 shares of its own stock for $16 per share. On December 10, Manx Company sold all of the same shares on the market for $20 per share.

Show how both of these transactions affect the accounting equation. Include both account titles and amounts.

Shareholders' equity