Question

On January 1, 2018, the stockholders’ equity section of Nance Corporation shows: Common stock ($5 par value) $1,500,000; paid-in capital in excess of par value $1,000,000; and retained earnings $1,200,000. During the year, the following treasury stock transactions occurred. March 1. Purchased 30,000 shares for cash at $10 per share. July1 Sold 6,000 treasury shares for cash at $12 per share. September 1 Sold 5,000 treasury shares for cash at $14 per share.
Prepare the journal entries for the 2018 treasury stock transactions.

Answer 1

Answer:

The Journal entries are as follows:

(i) On March 1,

Treasury stock [30,000 × $10)  A.c   Dr. $300,000

To cash                                                                       $300,000

(To record the shares purchased for cash)

(ii) On July 1,

Cash [6,000× $12]  A/c                 Dr. $72,000

To treasury stock  [6,000× $10]                        $60,000

To Excess of paid in capital  [6,000× $2]        $12,000

(To record selling of treasury shares for cash)

(iii) On September 1,

Cash [5,000× $14]  A/c                                 Dr. $70,000

To Excess of paid in capital  [5,000× $4]                         $20,000

To Treasury stock  [5,000× $10]                                       $50,000

(To record selling of treasury stock)