Question

During the year, the following selected transactions affecting stockholders' equity occurred for Navajo Corporation:

a. Feb. 1 Repurchased 220 shares of the company's own common stock at $22 cash per share.
b. Jul. 15 Sold 120 of the shares purchased on February 1 for $23 cash per share.
c. Sept. 1 Sold 90 of the shares purchased on February 1 for $21 cash per share.

Required:
Prepare the journal entry required for each of the above transactions.

Answer 1

Answer and Explanation:

The journal entries are shown below:

a. Treasury Stock Dr $4,840 (220 shares × $22)

To Cash $4,840

(Being repurchase stock for cash is recorded)

b Cash $2,760 (120 shares × $23)

To Treasury Stock $2,640 (120 shares × $22)

To Additional Paid in capital $120

(Being the sale of the shares are recorded)

c Cash $1,890 (90 shares × $21)

Additional Paid in capital $90

To Treasury Stock $1,980 (90 shares × $22)

(Being the sale of the shares are recorded)