Question

Kunze Corporation has $1 par value Common Stock with 100,000 shares authorized and 25,000 shares issued. The journal entry to record Kunze's purchase of 10,000 shares of common stock at $4 per share would be:

Answer 1

Answer and Explanation:

The journal entry to record the purchase of common stock is as follows:

Treasury stock (10,000 shares × $4 per share) $40,000

To cash $40,000

(being the purchase of common stock is recorded)

Here treasury stock is debited as it reduced the stockholder equity and the cash is credited as it also decreased the assets