Question

Swifty Corporation purchased from its stockholders 5,500 shares of its own previously issued stock for $275,000. It later resold 1,700 shares for $53 per share, then 1,700 more shares for $48 per share, and finally 2,100 shares for $42 per share. Prepare journal entries for the purchase of the treasury stock and the three sales of treasury stock.

Answer 1

Answer with its Explanation:

1. The repurchase of 5,500 shares from the sharesholders will be recorded as under:

Dr Treasury Stock $275,000

Cr Cash $275,000

2. The sale of 1,700 shares at $53 per share would be recorded as under:

Dr Cash ( 1,700 shares * $53 ) $90,100

Cr Treasury Stock ( 1,700 shares * $50 ) $85,000

Cr Paid in capital ( 1,700 shares * $3 ) $5,100

3. The Selling of the 1,700 shares at $48 each will be recorded as under:

Dr Cash ( 1,700 Shares * $48) $81,600

Dr Paid in capital ( 1,700 shares * $2) $3,400

Cr Treasury Stock ( 1,700 shares * $ 50 ) $85,000

4. The selling of 2,100 shares at $42 will be recorded as under:

Dr Cash ( 2,100 shares * $ 42 ) $88,200

Dr Paid in capital from treasury stock $1,700 ........ Step 1

Dr Retained Earnings $15,100 ...... Balancing Figure

Cr Treasury Stock ( 2,100 shares * $ 50 ) $105,000

Step 1. Paid in capital from Treasury Stock

Paid in capital from Treasury Stock = 5,100 - 3,400 = $1,700 Paid In capital

Retained Earnings will be Balancing Figure = 105,000 - 88,200 - 1,700 Paid In capital = $15,100

Answer 2

Answer: The answer is given below

Step-by-step explanation:

A journal is a book that is used in accounting to record the transactions that takes place in a company.

It should be noted that in the attached file, the amount that was paid in capital from the treasury stock was calculated as:

= 5,100 - 3,400

= 1,700

The retained earnings was also calculated as:

= 105,000 - 88,200 - 1,700

= 15,100

Check the attached file for further information.