BlueStar Airlines' October 13th, 2024, transaction involved reselling 3,000 repurchased shares at $12 each, resulting in a journal entry: Cash (Credit): $36,000; Treasury Stock (Debit): $24,000; Paid-in Capital - Treasury Stock (Debit): $96,000; Retained Earnings (Credit): $12,000. This captures the cash inflow, repurchase cost, the difference in value, and the impact on retained earnings.
The cash account is credited since the company received cash from the resale, and the treasury stock account is debited to reduce the recorded cost of the repurchased shares. The paid-in capital - treasury stock account is debited to recognize the difference between the resale price and the initial repurchase cost. Lastly, retained earnings are credited to reflect the impact of the transaction on the company's equity.
The journal entry for BlueStar Airlines' transaction on October 13th, 2024, when it resold the remaining 3,000 shares of its own previously repurchased stock for $12 per share, would be as follows:
Cash (Credit): $36,000
- This entry reflects the cash received from the sale of the 3,000 shares at $12 per share. The calculation is 3,000 shares * $12 per share = $36,000.
Treasury Stock (Debit): $24,000
- This entry represents the cost of the 3,000 shares repurchased and not yet resold. The calculation is 3,000 shares * $8 per share ($12 resale price - $4 initial repurchase cost) = $24,000.
Paid-in Capital - Treasury Stock (Debit): $96,000
- The difference between the cash received from the resale and the cost of repurchased shares is recorded in the Paid-in Capital - Treasury Stock account. The calculation is 3,000 shares * $32 per share ($16.50 resale price - $4 initial repurchase cost - $12 resale price) = $96,000.
Retained Earnings (Credit): $12,000
- This entry reflects the change in retained earnings due to the resale. The calculation is 3,000 shares * ($12 resale price - $4 initial repurchase cost) = $12,000.