(Solution) - The Stockholders Equity category of Little Joe s balance sheet on -(2025 Original AI-Free Solution)

Paper Details

The Stockholders' Equity category of Little Joe's balance sheet on January 1, 2012, appeared as follows:
Common stock, $5 par, 40,000 shares issued and outstanding..........$200,000
Additional paid-in capital........................................................90,000
Retained earnings...............................................................100,000
Total stockholders' equity....................................................$390,000
The following transactions occurred during 2012:
a. Reacquired 5,000 shares of common stock at $20 per share on February 1.
b. Reacquired 1,200 shares of common stock at $13 per share on March 1.
Required
1. Identify and analyze the effect of each transaction.
2. Assume that the treasury stock was reissued on October 1 at $12 per share. Did the company benefit from the treasury stock reissuance? Where is the ''gain'' or ''loss'' presented on the financial statements?
3. What effect did the two transactions to purchase treasury stock and the later reissuance of that stock have on the Stockholders' Equity section of the balance sheet?