Question

Elroy Corporation repurchased 4,000 shares of its own stock for $30 per share. The stock has a par of $10 per share. A month later, Elroy resold 900 shares of the treasury stock for $32 per share. Required: a. Record the two events in general journal format. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Here, selling price is $32 and the cost of treasury stock is $30, Hence selling price is higher than cost.

Following Journal Entries are to be passed:

(a) Treasury Stock (4,000 shares × $30) A/c Dr. $120,000

To Cash A/c $120,000

(b) Cash (900 Shares × Selling Price $32) A/c Dr. $28,800

To Treasury Stock (900 shares × Cost 30) $27,000

To Paid in Capital from Treasury Stock (Difference) $1,800