11/19/21, 8:43 AM Assignment Print View

Score: 50/50 Points 100 %

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11/19/21, 8:43 AM Assignment Print View
 
2. Award: 3 out of 3.00 points
 

Information taken from Nanotec Security Inc.’s January 31, 2020, balance sheet follows:
 
     
Common shares, 420,000 shares authorized, 34,000 shares issued and
outstanding $ 272,000
Retained earnings   80,350

On February 1, 2020, the company repurchased and retired 600 common shares (the first retirement the company has recorded).

Required:
Prepare General Journal entries to record the repurchase and retirement under each of the following independent assumptions.

The shares were repurchased for:

 
a. $5.50 per share
b. $8.00 per share
c. $10.50 per share

No Date General Journal Debit Credit

A Feb. 01, 2020 Common shares  4,800 

Contributed capital from retirement of common shares  1,500 

Cash  3,300 

B Feb. 01, 2020 Common shares  4,800 

Cash  4,800 

C Feb. 01, 2020 Common shares  4,800 

Retained earnings  1,500 

Cash  6,300 

References

Worksheet Learning Objective: 13-02

Describe and account for
retirement of shares.

Information taken from Nanotec Security Inc.’s January 31, 2020, balance sheet follows:
 
     
Common shares, 420,000 shares authorized, 34,000 shares issued and
outstanding $ 272,000
Retained earnings   80,350

On February 1, 2020, the company repurchased and retired 600 common shares (the first retirement the company has recorded).

Required:
Prepare General Journal entries to record the repurchase and retirement under each of the following independent assumptions.

The shares were repurchased for:

 
a. $5.50 per share
b. $8.00 per share
c. $10.50 per share

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11/19/21, 8:43 AM Assignment Print View

No Date General Journal Debit Credit

A Feb. 01, 2020 Common shares   4,800
Contributed capital from retirement of common shares   1,500
Cash   3,300

B Feb. 01, 2020 Common shares   4,800

Cash   4,800

C Feb. 01, 2020 Common shares   4,800

Retained earnings   1,500
Cash   6,300

 
Explanation:

Feb. 01, 2020:

a. Average issue price was $272,000/34,000 shares = $8.00 average issue price per share; 600 × $8.00 = $4,800; 600 × $5.50 = $3,300.
c. Cash = 600 × $10.50 = $6,300.

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