On April 2 a corporation purchased for cash 7,000 shares of its own $10 par comm
ID: 2564604 • Letter: O
Question
On April 2 a corporation purchased for cash 7,000 shares of its own $10 par common stock at $29 a share. It sold 4,000 of the treasury shares at $32 a share on June 10. The remaining 3,000 shares were sold on November 10 for $25 a share.
(a) Journalize the entries to record the purchase (treasury stock is recorded at cost) on April 2. Refer to the Chart of Accounts for exact wording of account titles.
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JOURNAL
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(b) Journalize the entries to record the sale of the stock on June 10 and Nov 10. Refer to the Chart of Accounts for exact wording of account titles.
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JOURNAL
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DATE DESCRIPTION POST. REF. DEBIT CREDIT1
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Explanation / Answer
Entries to record purchase and sale of treasury stock:
Entries
Date
Account Titles and Explanation
Post. REF
Debit
Credit
2-Apr
Treasury Stock
$203,000
Cash
$203,000
(To record purchase of own shares, 7,000 shares at $29 per share)
10-Jun
Cash (4,000 shares at $32 selling price)
$128,000
Treasury Stock (4,000 shares at cost $29 each)
$116,000
Paid-in-Capital from Treasury Stock
$12,000
(To record the sale of 4,000 shares at $32 per share, cost at $29 and additional paid-in capital at $3 per share)
10-Nov
Cash (3,000 shares at $25 per share)
$75,000
Paid-in-Capital from Treasury Stock
$12,000
Treasury Stock
$87,000
(To record the sale of 4,000 shares at $25 per share, cost at $29 and the difference between sales price and cost ($29 -$25)additional paid-in capital at $4 per share)
Entries
Date
Account Titles and Explanation
Post. REF
Debit
Credit
2-Apr
Treasury Stock
$203,000
Cash
$203,000
(To record purchase of own shares, 7,000 shares at $29 per share)
10-Jun
Cash (4,000 shares at $32 selling price)
$128,000
Treasury Stock (4,000 shares at cost $29 each)
$116,000
Paid-in-Capital from Treasury Stock
$12,000
(To record the sale of 4,000 shares at $32 per share, cost at $29 and additional paid-in capital at $3 per share)
10-Nov
Cash (3,000 shares at $25 per share)
$75,000
Paid-in-Capital from Treasury Stock
$12,000
Treasury Stock
$87,000
(To record the sale of 4,000 shares at $25 per share, cost at $29 and the difference between sales price and cost ($29 -$25)additional paid-in capital at $4 per share)
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