9 In 2018, Western Transport Company entered into the treasury stock transaction

Question

9 In 2018, Western Transport Company entered into the treasury stock transactions described below. In 2016, Western Transport had issued 210 million shares of its $1 par common stock at $21 per share. Required: Prepare the appropriate journal entry for each of the following transactions: (If no entry is required for a transaction/event, select "No journal entry required" in the first account fleld. Enter your answers in milions (l.e. 03-1603 10,000,000 should be entered as 10).) 1. On January 23, 2018, Western Transport reacquired 15 million shares at $24 per share. 2. On September 3, 2018, Western Transport sold 3 million treasury shares at $25 per share. 3. On November 4, 2018, Western Transport sold 3 million treasury shares at $22 per share. View Journal entry worksheet 0 Record the reacquisition of 15 million shares at $24 per share. Debit Credit K Prev 9 of 13 Next >

Explanation / Answer

1 to 3) Journal Entries (Amounts in millions $)

Working Notes:-

1) Paid in capital from treasury stock is available for only $3 million on Nov 4, 2018 and difference in sale of treasury stock is $6 million, therefore the balance of $3 million ($6-$3) is debited to Retained Earnings account on Nov. 4, 2018.

Date General Journal Debit Credit Jan 23, 2018 Treasury Stock (15 million shares*$24 per share) 360 Cash 360 (To record the reacquisition of shares) Sep. 3, 2018 Cash (3 million shares*$25) 75 Treasury Stock (3 million shares*$24 per share) 72 Paid in Capital-Treasury Stock ($75-$72) million 3 (To record sale of 3 million treasury shares) Nov. 4, 2018 Cash (3 million shares*$22 per share) 66 Paid in Capital-Treasury Stock 3 Retained Earnings ($72-$66-$3) million 3 Treasury Stock (3 million shares*$24) 72 (To record sale of 3 million treasury shares)

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