Question

In 2018, Poe’s Products completed the treasury stock transactions described below. January 2: Reacquired 12 million...

In 2018, Poe’s Products completed the treasury stock transactions described below.

January 2: Reacquired 12 million shares at $18 per share.

February 15: Sold 4 million shares at $25 per share.

September 20: Sold 4 million treasury shares at $20 per share.

Poe’s Products had issued 60 million shares of its $1 par common stock for $20 several years ago.

Prepare any necessary journal entries to record the above transactions. Show all computations.

I am not sure what account to use. Is it Paid-in capital - share repurchase account or Paid-in capital excess of par account???

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Answer #1

Journal entry :

Date account and explanation debit credit
Jan 2 Treasury stock (12*18) 216
Cash 216
(To record share repurchased)
Feb 15 Cash (25*4) 100
Treasury stock (4*18) 72
  Paid-in capital - share repurchase account (4*7) 28
(To record sold treasury shares)
Sep 20 Cash (4*20) 80
Treasury stock (4*18) 72
  Paid-in capital - share repurchase account (2*4) 8
(To record sold treasury shares)
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