Question

Record the journal entries for the following transactions. (A) Michael Company issues 25,000 shares of its $6 par common stock for $15 per share. (B) Michael Company purchases back 15,000 shares of it's common stock for $5 per share. (C) Michael Company resells 5,000 of it's treasury shares for $12 per share.

Answer 1

Account title	Debit	credit
a)
Cash/Bank (25000 * $15)	$      375,000
Common Stock (25000*$6)		$ 150,000
Additional Paid in Capital, Common Stock		$ 225,000
(To record the issue of Common stock)
b)
Treasury stock (15000*$5)	$         75,000
Cash/Bank		$    75,000
(To record the buy back of shares)
c)
Cash (5000*$12)	$         60,000
Treasury stock (5000*$5)		$    25,000
Additional Paid in Capital, Treasury stock		$    35,000
(To record the sale of Treasury stock above cost)