Question

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.

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)