Question

California Surf Clothing Company issues 1,000 shares of $1 par value common stock at $22 per share. Later in the year, the company decides to Purchase 100 shares at a cost of $25 per share.

Answer 1

Step-by-step explanation:

The journal entries are as follows:

1. Cash Dr $22,000 (1,000 shares × $22 per share)

To Common stock $1,000 (1,000 shares × $1 per share)

To Additional paid in capital in excess of par value - common stock $21,000

(Being the issuance of the common stock is recorded)

2. Treasury Stock Dr $2,500 (100 shares × $25)

To Cash $2,500

(Being the repurchase of the shares is recorded)

Note: The shares are repurchased not purchased so we done the journal entry according to that