Corporations: Organization and Capital Stock Transactions

Fechter Corporation had the following stockholders equity accounts on January 1, 2019: Common Stock ($5 par) $50,000, Paid-in Capital in Excess of Par-Common Stock $200,000, and Retained Earnings $100,000. In 2020, the company had the following treasury stock transactions

Fechter Corporation uses the cost method of accounting for treasury stock. In 2020,the company reported net income of $30,000

Instruction

1. Journalize the treasury stock transactions, and prepare the closing entry at December 31, 2020, for net income.
2. Open accounts for (1) Paid-in Capital from Treasury Stock, (2) Treasury Stock, and (3) Retained Earnings. Post toe these accounts using J10 as the posting reference..
3. Prepare the stockholders' equity section for Fechter Corporation at December 31, 2020.

Solution