Question

Corp. purchased from its stockholders 5,700 shares of its own previously issued stock for $290,700. It later resold 1,825 shares for $54 per share, then 1,825 more shares for $49 per share, and finally 2,050 shares for $43 per share.

Prepare journal entries for the purchase of the treasury stock and the three sales of treasury stock.

Answer 1

The Journal entries are as follows:

(i) Treasury Stock A/c Dr. $290,700

To cash $290,700

(To record purchase from stockholders)

(ii) Cash A/c Dr. $98,550

To Treasury Stock A/c $93,075

To Paid in Capital from Treasury Stock $5,475

(To record sales of shares at $54 per share)

Workings:

Treasury Stock = ($290,700 ÷ 5,700) × 1825

= $93,075

(iii) Cash A/c Dr. $89,425

Paid in Capital from Treasury Stock A/c Dr. $3,650

To Treasury Stock A/c $93,075

(To record sales of shares at $49 per share)

Workings:

Treasury Stock = ($290,700 ÷ 5,700) × 1825

= $93,075

(iv) Cash A/c Dr. $88,150

Paid in Capital from Treasury Stock A/c Dr. $1,825

Retained earnings A/c Dr. $14,575

To Treasury Stock A/c $104,550

(To record sales of shares at $43 per share)

Workings:

Treasury Stock = ($290,700 ÷ 5,700) × 2,050

= $104,550