Question

12. Prepare in journal form the entries necessary to record the following stock transactions of the Vallen Company during 2019: Oct. 1 Purchased 1,000 shares of its own common stock for $20 per share. Oct. 5 Sold 500 shares of treasury stock purchased on Oct 1. For $25 per share. Oct. 8 Sold 250 shares of treasury stock purchased on Oct 1. For $15 per share. Oct. 9 sold the remaining shares of treasury stock for $20 per share.

Answer 1

Credit Debit $20,000 $20,000 $12,500 $10,000 $2,500 Journal entry Date General Journal Oct-01 Treasury Stock, Common ( 1000 * $20) Cash (Purchase of its own common stock) Oct-05 Cash (500 *$25) Treasury Stock, Common (500 *$20) Paid in Capital, Treasury Stock (500 *$5) (sale of treasury shares at more than purchase price) Oct-08 Cash (250 *$15) Paid in Capital, Treasury Stock * Treasury Stock Common (250 *$20) (sale of treasury shares at less than purchase price) Oct-09 Cash (250 *$20) Treasury Stock, Common (250 *$20) (Sale of treasury stock at the purchase price) $3,750 $1,250 $5,000 $5,000 $5,000 * There was a balance of $2,500 in the Treasury Stock Paid-in Capital account. So $1250 is used from Treasury Stock Paid in capital account Remaining treasury shares = 1000 - 500 - 250 = 250 Shares