Treasury

User Generated

Npcvagb00

Business Finance

Acc306

ashford university

Description

Discuss the following:

  • The difference between the cost, par and constructive retirement method.
  • For the cost and par value methods, prepare journal entry examples of each using the following information:
    • 1000 shares of $5 par stock were sold for $7.
    • 500 shares were repurchased at a price of $6.
    • The 500 shares were later sold for $3500.
  • For the constructive retirement method prepare the following journal entry:
    • The shares were retired.

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Explanation & Answer

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Cost, par and constructive retirement method
When a company purchases its own shares, it is then called treasury stock. The
management may decide to retire its stock. The methods that can be used to retire the stock are
cost, par and constructive r...


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