[shawnl112]

Can someone show me the journal entries for this question and how Retained earning was deducted if possible. Thanks

Kuchman cookware issued 40,000 shares of its $8.00 par value common stock for $9 on January 1, Year 1. Kuchman repurchased 1,000 shares at $8 per share on April 1, Year 2, resold 500 shares at $9 per share on July 1, Year 2, and, on October 1, Year 2, resold the final 500 shares at $5 per share. Assuming Kuchman uses the par value method of accounting for its treasury stock, retained earnings at December 31. Year 2 would be reduced by:

a. 1,500

b. 1,000

c. 0

d. 500

The answer is d. 500