Question

During the year, the following selected transactions affecting stockholders' equity occurred for Navajo Corporation: a. Feb. 1 Repurchased 360 shares of the company's own common stock at $25 cash per share. b. Jul. 15 Sold 120 of the shares purchased on February 1 for $26 cash per share. c. Sept. 1 Sold 90 of the shares purchased on February 1 for $24 cash per share. Required: 1. Prepare the journal entry required for each of the above transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 2 3 Repurchased 360 shares of the company's own common stock at $25 cash per share. Note: Enter debits before credits. Transaction General Journal Debit Credit CORRORROR

Answer 1

Cost of shares reacquired on February 1 = 360 x 25

= $9,000

Cash proceeds from sale of treasury shares on July 15 = 120 x 26

= $3,120

Amount to be credited to Treasury stock on July 15 = Number of shares sold x Cost price per share

= 120 x 25

= $3,000

Amount to be credited to Paid in capital from treasury stock on July 15 = Number of shares sold x (Selling price per share - Cost price per share)

= 120 x (26 - 25)

= $120

Cash proceeds from sale of treasury shares on September 1 = 90 x 24

= $2,160

Amount to be credited to Treasury stock on September 1 = Number of shares sold x Cost price per share

= 90 x 25

= $2,250

Amount to be debited to Paid in capital from treasury stock on September 1 = Number of shares sold x (Cost price per share - Selling price per share )

= 90 x (25 - 24)

= $90

Journal

Date	Account title	Debit	Credit
Feb. 1	Treasury stock	9,000
	Cash		9,000
July 15	Cash	3,120
	Treasury stock		3,000
	Paid in capital from treasury stock		120
Sep. 1	Cash	2,160
	Paid in capital from treasury stock	90
	Treasury stock		2,250

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