Question

In 2021, Western Transport Company entered into the treasury stock transactions described below. In 2019, Western Transport had issued 280 million shares of its $1 par common stock at $28 per share. Required: Prepare the appropriate journal entry for each of the following transactions: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) 1. On January 23, 2021, Western Transport reacquired 20 million shares at $31 per share. 2. On September 3, 2021, Western Transport sold 2 million treasury shares at $32 per share. 3. On November 4, 2021, Western Transport sold 2 million treasury shares at $29 per share.

Answer 1

Solution:

Date	Account Titles and Explanation	Debit	Credit
Jan. 23	Treasury Stock (20M Shares*$ 31)	$      620
	Cash		$        620
	(Being Treasury Stock purchased)
Sept. 3	Cash (2M Shares* $32)	$        64
	Additional Paid-In Cap - Treasury Stock (2M Shares*$1)		$            2
	Treasury Stock (2M Shares*$31)		$          62
	(Being treasury stock resold)
Nov. 4	Cash(2M Shares*$29)	$        58
	Additional Paid-In Cap - Treasury Stock	$          2
	Retained Earnings	$          2
	Treasury Stock (2M Shares*$31)		$          62
	(Being treasury stock resold)

Notes:

1) If the differences between selling price of treasury stock is less than its cost, then such differences is first adjusted to available Additional Paid-In Cap - Treasury Stock and balance to Retained Earnings as shown in the Nov. 4 entry.

2) All amounts are in millions.

3) Cost method has been used for accounting the transactions.