I am working with treasury stock in one of my assignments.

The beginning of the assignment:
Greeve Corporation has the following stockholders' equity accounts on Jan 1, 2006
Common Stock ($1 par) $400,000
Paid-in capital in Excess of Par Value $500,000
Retained Earnings $100,000

I needed to and did journalize the stock treasury transactions which were

Mar 1. Purchased 5,000 shares at $7 per share
June 1. Sold 1,000 shares at $10 per share (above cost)
Sept 1 Sold 2,000 shares at $9 per share (above cost)
Dec 1 Sold 1,000 shares at $5 per share (below cost)

I needed to use the cost method of accounting for treasury stock and in 2006, the company reported net income of $60,000

Now I need to prepare a closing entry at December 31, 2006 for net income. I am very lost. I have prepared closing entries before with revenue and expense, but not stocks. Please help. What do I need to include in this closing entry?

I think we are taking the same class. Have you figured it out yet? I'm stuck in the same place. :(

Yeah same here lol same class I'm guessing... wiley? I can't figure this out... o wow but I noticed this question was asked 5 months ago! I need help with this one too though!

Nobody knows?? :eek:

I have this problem right now as well. I was looking in the book and the closing entry for net income is done by putting the amount into the Retained earnings account. The balance for the net income comes by the closing entries from the revenue accounts and the liability accounts into the income summary account. This account needs to be closed by placing the amount into the retained earnings account. If this is a net loss, you would debit the retained earnings and credit the income summary.

I am not sure if this is correct, I will know in a few days, but I am given the net income amount of $60,000 in the beginning of the problem. I am making an entry of debiting the income summary account and crediting the retained earnings account. This increases the retained earnings account from $100,000 to $160,000.

Like I said, I will know in a few days whether this entry is the correct entry or not. I hope I did not confuse anyone with this answer.

This is a case of everyone trying to change a concept because they're doing a different kind of company.

Closing entries for a corporation are the same as closing entries for a sole proprietorship (which it sounds like you already learned), with only a couple of minor adjustments. The concept of the closing entries remains the same and the types of accounts closed remains the same.

To begin with, leahlife, you don't close stocks (treasury or otherwise) and you still close revenues & expenses. You're trying to change the concept because it's a corporation.

Here is what is the same:
Revenues still close to income summary. Expenses still close to income summary. Nothing is different. And when you get done with that part, you will still have net income in income summary.

Here is what is different:
Drawing is now called dividends. The concept is the same because dividends are payments out to the owners, just like Drawing is a payment out to the owner. But it closes the same way.

Income Summary and Dividends are now closed to Retained Earnings instead of Capital. They are still closed to equity - hence, the concept remains the same. But we no longer just have one capital account where everything goes in equity. We have split it all up into stock (investment portion) and retained earnings (income portion). So it's all closed to retained earnings.

Hence:
Dr revenue accounts
Cr income summary

Dr income summary
Cr expense accounts

Dr income summary (assuming a net income and not loss)
Cr retained earnings

Dr retained earnings
Cr cash and/or stock dividends

Compare that to when you first learned closing and see how much it actually relates to it. (I've replaced capital with retained earnings, and drawing is called dividend. But same concept.)

Just as a note: some books take dividends directly out of retained earnings at the time they are recorded, which would eliminate the need for that very last entry. If you don't have any dividend accounts in your equity section, then you obviously can't close them.

Dee, you had the right idea, except you don't close liabilities, you close expenses -- though that might be what you meant to say since you get that you're closing net income to retained earnings.

The 2nd part of the problem is to open accounts for (1) Paid in capital from treasury stock, (2) treasury stock and (30 Retained earnings. Post to these accounts using j12 as the posting reference. What does this mean?

"Opening an account" simply means writing in the account names into a ledger, or t account, whichever you're using, and entering any beginning balances that may exist.

Can a shareholder who has paid in capital with an Oil Futures account, take the money received from the sale of this investment for personal bills and reduce the paid in capital account or must it be recorded as a distribution?