P11-2A Greeve Corporation_Treasury Shares

P11-2A Greeve
Corporation had the following stockholders’ equity accounts on January 1,

2011: Common
Stock ($1 par) $400,000, Paid-in Capital in Excess of Par Value $500,000, and

Retained
Earnings $100,000. In 2011, the company had the following treasury stock
transactions.

Mar. 1 Purchased
5,000 shares at $7 per share.

June 1 Sold
1,000 shares at $10 per share.

Sept. 1 Sold
2,000 shares at $9 per share.

Dec. 1 Sold
1,000 shares at $5 per share.

Greeve
Corporation uses the cost method of accounting for treasury stock. In 2011, the
company reported net income of $60,000.

Instructions

(a) Journalize
the treasury stock transactions, and prepare the closing entry at December 31,

2011, for net
income.

(b) Open
accounts for (1) Paid-in Capital from Treasury Stock, (2) Treasury Stock, and

(3) Retained
Earnings. Post to these accounts using J12 as the posting reference.

(c)
Prepare the stockholders’ equity section for Greeve Corporation at December 31,
2011