Question

Prior to June 1, Sandler Company had no treasury stock transactions. Then, on June 1, the company paid $5,000 to purchase 100 shares of its common stock on the open market. On July 1, the company sold 50 of these shares at $52 per share. Then, on August 1, the company sold the remaining 50 shares at $46 per share. Complete the journal entry for the sale of the treasury stock on July 1 by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.

Answer 1

Answer:

Explanation:

The journal entries are shown below:

On June 1

Treasury Stock A/c Dr $5,000 (50 shares × $100)

To Cash A/c $5,000

(Being treasure stock is purchased)

On July 1

Cash A/c Dr $2,600 (50 shares × $52)

        To Treasury Stock A/c $2,500     (50 shares × $50)

         To Paid in capital - Treasury stock $100

(Being treasury stock is sold at higher price and the remaining amount would be credited to the paid in capital account)

On August 1

Cash A/c Dr $2,300       (50 shares × $46)

Paid in capital - Treasury stock $100

Retained Earnings A/c Dr $100

                To Treasury Stock A/c $2,500 (50 shares × $50)

(Being treasury stock is sold at lower price and the remaining amount would be debited to the retained earning account)