Question

Sprinkle Inc. has outstanding 10,000 shares of $10 par value common stock. On July 1, 2020, Sprinkle reacquired 200 shares at $91 per share. On September 1, Sprinkle reissued 80 shares at $102 per share. On November 1, Sprinkle reissued 120 shares at $70 per share. Prepare Sprinkle's journal entries to record these transactions using the cost method.

Answer 1

7/1/20

Dr Treasury Stock $18,200

Cr Cash $18,200

9/1/20

Dr Cash $8,160

Cr Treasury Stock $7,280

Cr Paid-in Capital - Treasury Stock $880

1/1/20

Dr Cash $8,400

Dr Paid-in Capital - Treasury Stock $2,520

Cr Treasury Stock

Explanation:

Preparation of Sprinkle's journal entries to record these transactions using the cost method.

7/1/20

Dr Treasury Stock $18,200

(200 shares * $91 per share)

Cr Cash $18,200

(Being To record the reacquired 200 shares)

9/1/20

Dr Cash $8,160

(80 shares * $102 per share)

Cr Treasury Stock $7,280

(80 shares * 91 per share)

Cr Paid-in Capital - Treasury Stock $880

($8,160-$7,280)

(Being To record the reissue of treasury stock)

1/1/20

Dr Cash $8,400

(120 shares * $70per share)

Dr Paid-in Capital - Treasury Stock $2,520

($91- $70 = $21* 120 shares)

Cr Treasury Stock

(120 shares * $91 per share) $10,920

(Being To record the reissue of treasury stock)