Question

In 2018, Western Transport Company entered into the treasury stock transactions described below. In 2016, Western Transport had issued 270 million shares of its $1 par common stock at $27 per share. Required: Prepare the appropriate journal entry for each of the following transactions: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) On January 23, 2018, Western Transport reacquired 20 million shares at $30 per share. On September 3, 2018, Western Transport sold 3 million treasury shares at $31 per share. On November 4, 2018, Western Transport sold 3 million treasury shares at $28 per share.

Answer 1

23rd January 2018

Dr Common share 600

Cr Cash 600

(to record the repurchase of 20 million common shares at $30)

3rd September 2018

Dr Cash 93

Cr Common Share 90

Cr Paid-in Capital 3

(to record the sold of 3 million common shares at $31, thus get $31 x 3 million =93 million increase in Cash, in which $30 x 3 million = $90 million will be credited to Common share account ( as reacquired price is $30 per share), the other $3 million will be credited to Paid-in capital account)

4th November 2018

Dr Cash 84

Dr Paid-up capital 3

Dr Retained earnings 3

Cr Common share 90

(to record the sold of 3 million common shares at $28, thus get $28 x 3 million =84 million increase in Cash. Common share account will be credited at the amount of $30 x 3 million = $90 million( as reacquired price is $30 per share), leaving $3 million will be debited to Paid-in capital account ( available balance) and another $3 million will be debited to Retained earnings).

Step-by-step explanation:

Explanations are given in each entry.