Irrigate Smart Inc. develops and produces spraying equipment for lawn maintenance and industrial uses. On February 17 of the current year,

Irrigate Smart Inc. develops and produces spraying equipment for lawn maintenance and industrial uses. On February 17 of the current year, Irrigate Smart Inc. reacquired 50,000 shares of its common stock at $12 per share. On April 29, 31,000 of the reacquired shares were sold at $15 per share, and on July 31, 12,000 of the reacquired shares were sold at $17.

a. Journalize the transactions of February 17, April 29, and July 31.
b. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year?
c. What is the balance in Treasury Stock on December 31 of the current year?
d. How will the balance in Treasury Stock be reported on the balance sheet?


Answer:














a. Feb. 17 Treasury Stock (50,000 shares × $12) 600,000
Cash 600,000
Apr. 29 Cash (31,000 shares × $15) 465,000
Treasury Stock (31,000 shares × $12) 372,000
Paid-In Capital from Sale of Treasury
Stock [31,000 shares × ($15 – $12)] 93,000
July 31 Cash (12,000 shares × $17) 204,000
Treasury Stock (12,000 shares × $12) 144,000
Paid-In Capital from Sale of Treasury
Stock [12,000 shares × ($17 – $12)] 60,000





b. $153,000 ($93,000 + $60,000) credit
c. $84,000 (7,000 shares × $12) debit
d. The balance in the treasury stock account is reported as a deduction from the total of the paid-in capital and retained earnings.