Question

Please I want answer for these questions by typing. Big Thanks

1. Prepare the necessary journal entry for each of the following transactions for Nadim Corporation.

1. a) Purchased 5,000 shares of the company’s common stocks as treasury stock, paying cash of $18 per share.
2. b) Sold 3,000 shares of the treasury stock for cash of $22 per share.
3. c) Sold the remaining treasury stock for cash of $10 per share.

1. What is treasury stock? What type of account is Treasury stock, and what is the account’s normal balance?

Answer 1

sno	accounts	debit	credit
a	Treasury stock a/c	$90,000
	...........To cash a/c		90,000
	(amount = $18*5000=>90,000)
b.	cash a/c	66,000
	........To treasury stock a/c		54,000
	........To additional paid in capital a/c- treasury stock		12,000
	(amount ; cash= 3000*$22=>$66,000, treasury stock =$18*3000=>$54,000...additional paid in capital = 66,000-54,000=>12,000
c	cash a/c	20,000
	additional paid in capital a/c- treasury stock	12,000
	retained earnings a/c	4,000
	...............To treasury stock		36,000
	(cash = 2,000*$10=>20,000...additional paid in capital - (balance from above)=>$12,000....treasury stock (2000*$18)=>$36,000.....retained earnings =$4000 (balance))

Treasury stock;

When an entity purchases its own stock, it will be called treasury stock.

Treasury stock is a contra equity acccount.

It will have a credit balance.