Question

QUESTION 3 Bramble Corp. acquired 22200 shares of its own common stock at $21 per share on February 5. Year 17, and sold 11100 of these shares at $28 per share on August 9, Year 18. The fair value of Bramble's common stock was 525 per share at December 31, Year 17, and 526 per share at December 31, Year 18. The cost method is used to record treasury stock transactions. What accounts) should Bramble credit in 2018 to record the sale of 11100 shares?" 1 Treasury Stock for $233100 and Paid-in Capital from Treasury Stock for $77700 Treasury Stock for $277500 and Retained Earnings for 533300, Treasury Stock for $233100 and Retained Earnings for 577700. Treasury Stock for $310800.

Answer 1

On February 5, year 17 22,200 shares were purchased at a cost of $21 per share.

On August 9, year 18, 11,100 of treasury shares were sold on $28 per share.

The following entry will be made on August 9, year 18 to record sale of shares as per cost method:

Date	General Journal	Debit	Credit
August 9, Year 18	Cash	$310,800
	Treasury stock		$233,100
	Paid in capital from treasury stock		$77,700

Cash proceeds from sale of treasury shares on August 9, year 18 = Number of shares sold x Selling price per share
= 11,100 x 28
= $310,800
Amount to be credited to Treasury stock on August 9, year 18 = Number of shares sold x Cost price per share
= 11,100 x 21
= $233,100
Amount to be credited to Paid in capital from treasury stock on August 9, year 18 = Number of shares sold x (Selling price per share - Cost price per share)
= 11,100 x (28 - 21)
= $77,700

First option is correct option.

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