Question

Treasury stock. Agler Corporation's balance sheet reported the following: Capital stock outstanding, 2,000 shares, par $60...

Treasury stock. Agler Corporation's balance sheet reported the following:

Capital stock outstanding, 2,000 shares, par $60 per share $120,000

Paid-in capital in excess of par 70,000

Retained earnings 150,000

The following transactions occurred this year:

(a) Purchased 200 shares of capital stock to be held as treasury stock, paying $59 per share.

(b) Sold 150 of the shares of treasury stock at $69 per share.

(c) Sold the remaining shares of treasury stock at $54 per share.

Instructions Prepare the journal entry for these transactions under the cost method of accounting for treasury stock.

Homework Answers

Answer #1

Solution:

Journal Entries
S. No. Account Title and Explanation Debit Credit
(a) Treasury Stock Dr (200*$59) $11,800.00
       To Cash $11,800.00
(To record purchase of Treasury stock)
(b) Cash Dr (150*$69) $10,350.00
      To Treasury Stock (150*$59) $8,850.00
      To Paid in Capital from Treasury Stock $1,500.00
(To record sales of 150 treasury shares)
(c ) Cash Dr (50*$54) $2,700.00
Paid in Capital from Treasury Stock Dr $250.00
      To Treasury Stock (50*$59) $2,950.00
(To record sales of 50 treasury shares)
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