The following excerpt is from an article reported in an online issue of bloomberg. ford motor co. (f) said it will repurchase $1.8 billion of its shares to reduce dilution from recent stock grants to executives. the par amount per share for ford ’s common stock is $0.01. paid-in capital—excess of par is $5.39 per share on average. the market price was $16. required: 1. suppose ford reacquires 112 million shares through repurchase on the open market at $16 per share. prepare the appropriate journal entry to record the purchase. ford considers the shares it buys back to be treasury stock. 2. suppose ford considers the shares it buys back to be retired rather than treated as treasury stock. prepare the appropriate journal entry to record the purchase.

EventGeneral JournalDebitCredit    

1Treasury stock1792    

Cash1792    

Ford reacquires 112 million shares through repurchase on the open market at $16 per share      

EventGeneral Journal                                DebitCredit    

2Db Common stock1,12    

Paid-in capital—excess of par, common_603,68    

Retained earnings1187,2    

Cash1792    

 Suppose Ford considers the shares it buys back to be retired rather than treated as treasury stock

Explanation:

EventGeneral JournalDebitCredit    

1Treasury stock1792    

Cash1792    

Ford reacquires 112 million shares through repurchase on the open market at $16 per share      

EventGeneral Journal                                DebitCredit    

2Db Common stock1,12    

Paid-in capital—excess of par, common_603,68    

Retained earnings1187,2    

Cash1792    

 Suppose Ford considers the shares it buys back to be retired rather than treated as treasury stock