Question

On July 1, Bramble Corporation purchases 670 shares of its $6 par value common stock for the treasury at a cash price of $9 per share. On September 1, it sells 420 shares of the treasury stock for cash at $14 per share.

Journalize the two treasury stock transactions. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Date Account Titles and Explanation Debit Credit

Answer 1

Answer and Explanation:

The journal entries are shown below:

On July 1

Treasury stock Dr (670 shares × $9 per share) $6,030

To Cash $6,030

(Being the purchase of treasury stock is recorded)

For recording this we debited the treasury stock as it increased the treasury and credited the cash as it decreased the assets

On Sep 1

Cash Dr (420 shares × $14 per share) $5,880

To Treasury Stock (420 shares × $9 per share) $3,780

To Additional paid in capital - Treasury stock $2,100

(Being the resale of treasury stock is recorded)

For recording this we debited the cash as it increased the assets and credited the treasury stock and additional paid in capital as the sale is made