The December 31, 2018, Balance Sheet of MBI Company Included

question 162

Essay

The December 31, 2018, balance sheet of MBI Company included the following: $\begin{array}{|l|l|}\hline\text { Common stock, 20 million shares outstanding at } \$ 1 \text { par } & \$ 20,000,000 \\\hline \text { Paid-in capital-excess of par } & 100,000,000 \\\hline \text { Retained earnings } & 115,000,000\\\hline\end{array}$ MBI completed the following transactions in 2018 relating to treasury stock: $\begin{array}{|l|l|}\hline \text { March 17: } & \text { Reacquired } 2 \text { million shares at } \$ 10 \\\hline \text { May 17: } & \text { Reacquired 2 million shares at } \$ 9 \\\hline \text { August 10: } & \text { Issued 3 million shares at } \$ 12 \\\hline\end{array}$ Required:
Prepare journal entries to record the foregoing transactions on a weighted average basis.

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Definitions:

Relevant Range

The range of activity or volume over which the assumed cost behavior is valid, beyond which cost patterns and relationships may change.

Average Costs

The total costs divided by the number of units produced, giving a per unit cost average.

Total Variable Cost

The sum of all costs that vary with output level, including materials, labor, and other costs that increase with production volume.

Relevant Range

The range of activity within which the assumptions about fixed and variable cost behavior are valid.