Question

Record Chiron Company's treasury stock transactions listed below using the cost method [prepare journal entries]:

1. Purchased 700 shares of common stock to be held as treasury stock, paying $52 per share
2. Sold 260 of the shares of treasury stock at $48 per share
3. Sold 120 shares of treasury stock at $58 per share

Answer 1

sno	Particulars	Debit	Credit
1	Treasury stock	36,400
	............To cash		36,400
	($52*700=>$36,400)
2	Cash	12,480
	discount on capital	1,040
	.........To Treasury stock		13,520
	(cash = 48*260=>12480, treasury stock =260*48=>12,480, discount on capital = 13520-12480=>1040)
3	cash	6,960
	............To Treasury stock		6,240
	...........To additional paid in capital		720
	(cash = 120*58=>6960, treasury stock =120*52=>6240, additional paid in capital = 6960-6240=>720)