Question

Prepare in journal form the entries necessary to record the following stock transactions of the Seoul Company during 2011: Oct. 1 Purchased 2,000 shares of its own $2 par value common stock for $20 per share, the current market price. 17 Sold 500 shares of treasury stock purchased on October 1 for $25 per share.

Answer 1

JOURNAL ENTRY     

   DEBIT   CREDIT

1.   Treasury stock $40,000   

Cash $40,000

(To record the purchase of 2,000 shares at $20 per share)

2. Cash 12,500

Treasury Stock 10,000

Paid-in Captal from Treasury Stock   2,500

( To record the sale of 500 shares at $25 per share)

Note: When Treasory Stock is sold above its cost, credit the excess if the selling price over cost to Paid-in Papital from treasury stock.

When Treasury Stock is sold below its cost, deit the excess of cost over the selling price to Paid-in Capital from Treasury Stock.