Question

Treasury Stock Transactions Mystic Lake Inc. bottles and distributes spring water. On July 9 of the current year, Mystic Lake reacquired 60,000 shares of its common stock at $42 per share on September 22. Mystic Lake sold 45,000 of the reacquired shares a $51 per share. The remaining 15,000 shares were sold at $40 per share on November 23. a. Journalize the transactions of July 9, September 22, and November 23. If an amount box does not require an entry, leave it blank. July 9 Treasury Stock 2.520.000 Cash Sept. 22 Cash Treasury Stock Pald-In Capital from Sale of Treasury Stock Nov 23 Cash Paldin Capital from Sale of Treasury Stock Treasury Stock The repurchase of shares, known as treasury stock, is typically recorded using the cost method. When the treasury stock is resold, what is the company receiving! What is it giving up? Keep in mind the price paid to buy the treasury stock and the price the shares are resold for at a later date Check My War < Previous Next > Save and Exit Submit Assignment for Grading

Answer 1

Solution:

Journal Entries: In the books of Mystic Lake Inc.

Date	Description	Debit	Credit
July. 9	Treasury Stock (60,000*$42)	$    2,520,000
	Cash		$     2,520,000
	(To record Treasury Stock purchased)
Sept. 22	Cash (45000*$51)	$    2,295,000
	Treasury Stock (45000*42)		$     1,890,000
	Paid-In Cap from Sale of Treasury Stock (45000*$9)		$         405,000
	(To record treasury stock resold)
Nov. 23	Cash (15000*$40)	$       600,000
	Paid-In Cap from Sale of Treasury Stock (15000*$2)	$          30,000
	Treasury Stock (15000*$42)		$         630,000
	(To record treasury stock resold)