On april 10, 2019, amelia inc. purchased 200 shares of its own common stock in the market for $12 per share. on september 28, 2019, the company sold 120 of these shares in the open market at a price of $14 per share. required: a. use the horizontal model to show the effects on amelia inc.’s financial statements of the purchase of the treasury stock on april 10, 2019. indicate the financial statement effect.

                    Assets     =  Liabilities  +                Equity

Purchase:        cash                            Treasury Stock   Addiotnal Paid-in TS

                     (2,200)                                (2,200)

Sale of Treasury Stock

                       1,680                                   1,440               240

Explanation:

Purchase of Treasury Stock:

the purchase will decrease both, assets as we are using cash

And equity, as the outstanding shares decrease.

The transaction is reported at cost: 200 shares x $ 12 each = 2,400

Sale of treasury stock:

As the price is different we will recognize an additional paid-in for the difference:

cash proceeds:             120 x 14 = 1,680

treasury stock at cost: 120 x 12 = 1,440

additional paid-in                            240

c.

clarify customers’ doubts only when asked.