![Brief Exercise 18-7 (Algo) Treasury stock [LO18-5] ok The Jennings Group reacquired 3 million of its shares at $58 per share](http://img.homeworklib.com/questions/dc59a800-0f8c-11eb-9d2e-49cf77de85fe.png?x-oss-process=image/resize,w_560)
Homework Answers
Number of treasury shares acquired = 3,000,000
Cost per share = $58
Last year, 2,000,000 shares were sold at $59 per share.
Amount credited to paid in capital from treasury stock = Number of shares sold x (Selling price per share - Cost per share)
= 2,000,000 x (59-58)
= $2,000,000
Remaining 1,000,000 shares are sold at $55 per share.
Following journal entry will be made to record the sale of 1,000,000 shares:
| General Journal | Debit | Credit |
| Cash | 55,000,000 | |
| Paid in capital from treasury stock | 2,000,000 | |
| Retained earnings | 1,000,000 | |
| Treasury stock | 58,000,000 |
Paid in capital from Treasury stock will be debited by $2,000,000 since there is a credit balance of $2,000,000 in paid in capital from treasury stock.
Retained earnings will decline by 1 million.
Kindly comment if you need further assistance. Thanks‼!
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