Question

Section F--Treasury Stock Transactions Albany State Corporation balance sheet reported the following: Capital stock outstanding, 10,000 shares, par value $15 Paid-in capital in excess of par Retained earnings $150,000 40,000 60,000 Prepare the journal entry for the following transactions under the cost method of accounting for treasury stock 1. Purchased 1,000 shares of common stock to be held as treasury stock, paying $25 per share. 2. Sold 300 of these shares of at $30 per share. eno vol blog stolz Logo b oble

Answer 1

Answer:

Question 1 Date Account Name Debit Credit Treasury Stock (1,000 X $25) $ 25,000 Cash $ 25,000 (To record purchase of own stock - 1,000 shares for $25 each) Question 2 Cash (300 X $30) $ 9,000 Paid in Capital from Sale of Treasury Stock $ 1,500 Treasury Stock (300 X $25) $ 7,500 (To record sale of treasury stock 300 shares at $30 each, which was reacquired at $25) Calculation of Paid in Capital from Sale of Treasury Stock amount: Paid in Capital from Sale of Treasury Stock = (Sale price - Purchase price) X Number of treasury shares sold Paid in Capital from Sale of Treasury Stock = ($30 - $25) X 300 Paid in Capital from Sale of Treasury Stock = $1,500 Cost Method requires that the treasury shares to be recorded at actual cost that it was purchased for.