Question

Corporation's only treasury stock transactions for the current year follow:

(1) 2,000 shares of its common stock were purchased on June 1 for $80,000

(2) On July 1 it reissued 500 of these shares at $45 per share

(3) On August 1 it reissued an additional 500 treasury shares at $38 per share.

1. Prepare the journal entries required to record these transactions.
2. Calculate the balance in Paid-in Capital, Treasury Stock, on September 1 assuming its beginning-year balance is zero.

Answer 1

General Journal Debit Credit Date Jun-01 Treasury Stock, Common 80,000 Cash 80,000 (Common stock of its own purchased) Jul-01 Cash (500 *$ 45 ) $ 22,500 Treasury Stock, Common 500 *$ 40) $20,000 $ Paid in capital, Treasury Stock 2,500 (Reissue of treasury stock was recorded) Aug-01 Cash (500 *$ 38) 19,000 Paid in capital, Treasury Stock Treasury Stock, Common (500 *$ 40) (Reissue of treasury stock was recorded) 1,000 $ 20,000

Balance in Paid In Capital, Treasury Stock 1,500 Credit balance Beginning Balance Paid in capital, Treasury Stock ( 1st July) Credit Balance Paid in capital, Treasury Stock ( 1st August) Debit Balance $ Balance in Paid In Capital, Treasury Stock, September 1 $ $ 2,500 1,000 1,500 Credit Balance There is a credit balance in Paid in capital, Treasury Stock of $ 1500