Question

Use the information below for the following questions. the original sale of the $50 par value common stock of grady company was recorded as follows:

cash......................................................... 290,000
common stock......................... 250,000
additional paid-in capital...... 40,000

the company uses the cost method to account for treasury stock. record the journal entries for the following transactions. assume they are listed in the order in which they occurred.
transactions:
(a) grady purchased 600 shares of its own common stock for $62 each.
(b) grady sold 180 shares of treasury stock for $60 each.
(c) grady sold 90 treasury shares at $68 each.
(d) grady sold 100 shares of treasury stock for $61 each.
(e) grady sold the remainder of the treasury shares for $58 each.

Answer 1

To record the journal entries for the given transactions involving the sale of treasury stock, we need to debit/credit the appropriate accounts. The journal entries for each transaction are listed below. (a) Debit Treasury Stock and credit Cash. (b) Debit Cash and credit Treasury Stock.

Step-by-step explanation:

To record the journal entries for the transactions mentioned, we need to understand the effect of each transaction on the different accounts.

(a) Grady purchased 600 shares of its own common stock for $62 each.

Journal Entry:

• Debit Treasury Stock - $37,200 (600 shares * $62)
• Credit Cash - $37,200 (600 shares * $62)

(b) Grady sold 180 shares of treasury stock for $60 each.

Journal Entry:

• Debit Cash - $10,800 (180 shares * $60)
• Credit Treasury Stock - $10,800 (180 shares * $60)

(c) Grady sold 90 treasury shares at $68 each.

Journal Entry:

• Debit Cash - $6,120 (90 shares * $68)
• Credit Treasury Stock - $6,120 (90 shares * $68)

(d) Grady sold 100 shares of treasury stock for $61 each.

Journal Entry:

• Debit Cash - $6,100 (100 shares * $61)
• Credit Treasury Stock - $6,100 (100 shares * $61)

(e) Grady sold the remainder of the treasury shares for $58 each.

Journal Entry:

• Debit Cash - $14,200 ((250 shares - 600 - 180 - 90 - 100) * $58)
• Credit Treasury Stock - $14,200 ((250 shares - 600 - 180 - 90 - 100) * $58)