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Better Co. is authorized to issue 5,000 shares of $5 par common stock and enters into the following stock transactions:
- January 10, issues 3,000 shares of $5 par common stock for $12 per share
- March 1, reacquires 500 shares of common stock as treasury stock at a cost of $13 per share
- May 10, reissues 350 shares of treasury stock for a price of $15 per share
- July 15, reissues another 100 shares of treasury stock for a price of $8 per share
Required: (please show work)
a. What value should be used as the "cost basis" of treasury stock for 500 treasury shares purchased on March 1?
b. How many shares are outstanding on May 10th (after treasury stock transaction)?
c. Record all journal entries for the above transactions using the "cost method" for treasury stock.
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