Ex. 293
Agler Corporation purchased 4,000 of its €5 par value ordinary shares for a cash price of €12 per share. Two months later, Agler sold the treasury shares for a cash price of €10 per share.
Instructions
Prepare the journal entry to record the sale of the treasury shares assuming
(a)No balance in Share Premium–Treasury.
(b)A €5,000 balance in Share Premium–Treasury.
Ex. 294
An inexperienced accountant for Otto Corporation made the following entries.
July1Cash............................................210,000
Share Capital–Ordinary.......................................210,000
(Issued 15,000 no-par ordinary shares, stated value $10 per share)
Sept.1Share Capital–Ordinary..............................28,000
Retained Earnings6,000
Cash34,000
(Purchased 2,000 treasury shares (issued on July 1) at $17 per share)
Dec.1Cash............................................20,000
Share Capital–Ordinary.......................................14,000
Gain on Sale of Shares........................................6,000
(Sold 1,000 treasury shares at $20 per share)
Instructions
(a)On the basis of the explanation for each entry, prepare the entry that should have been made for the transactions. (Omit explanations.)
(b)Prepare the correcting entries that should be made to correct the accounts of Otto Corporation. (Do not reverse the original entry.)