Question

Marigold Corp.'s balance sheet reported the following:

Capital stock outstanding, 5,000 shares, par $40 per share		$200,000
Paid-in capital in excess of par		76,200
Retained earnings		105,600

The following transactions occurred this year:

(a)		Purchased 200 shares of capital stock to be held as treasury stock, paying $62 per share.
(b)		Sold 150 of the shares of treasury stock at $67 per share.
(c)		Sold the remaining shares of treasury stock at $55 per share.

Prepare the journal entry for these transactions under the cost method of accounting for treasury stock. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No.	Account Titles and Explanation	Debit	Credit
(a)
(b)
(c)

Answer 1

Solution:
	Journal Entries
	Sr. No.	Date	Account Title and explanation	Debit	Credit
	1	-------	Treasurry stock (200 Shares X $ 62)	$12,400
			Cash		$12,400
			(To Record the purchase of treasurry Stock)
	2	-------	Cash (150 Shares X $ 67)	$10,050
			Treasurry Stock ($ 150 Shares X $ 62)		$9,300
			Paid in Capital in excess of Par - Treasurry Stock		$750
			(To record the resold of treasury stock)
	3	-------	Cash (50 Shares X $ 55)	$2,750
			Paid in Capital in excess of Par - Treasurry Stock	$350
			Treasurry Stock (50 Shares X $ 62)		$3,100
			(To record the resold of treasury stock)