Question

On August 19, 2019, Portland Corporation repurchases 1,400 shares of its outstanding common stock for $9 per share. On October 31, 2019, Portland sells 600 shares of treasury stock for $13 per share. Any additional sales of treasury stock during the year were sold for $4 per share. On December 31, 2019, Portland had no remaining treasury stock.

Required:
Prepare the necessary journal entries to record any transactions associated with treasury stock.

Answer 1

Portland Corporation

Journal Entries:

August 19, 2019:

Debit Treasury Stock $12,600

Credit Cash $12,600

To record the purchase of 1,400 shares of treasury stock for $9 per share.

October 31, 2019:

Debit Cash $7,800

Credit Treasury Stock $7,800

To record the resale of 600 shares of treasury stock for $13 per share.

December 31, 2019:

Debit Cash $3,200

Credit Treasury Stock $3,200

To record the resale of 800 shares of treasury stock for $4 per share.

December 31, 2019:

Debit Additional Paid-in Capital $1,600

Credit Treasury Stock $1,600

To record the loss incurred in the sale of treasury stock.

Step-by-step explanation:

a) Data and Analysis:

August 19, 2019: Treasury Stock $12,600 Cash $12,600

October 31, 2019: Cash $7,800 Treasury Stock $7,800

December 31, 2019: Cash $3,200 Treasury Stock $3,200

December 31, 2019: Additional Paid-in Capital $1,600 Treasury Stock $1,600