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On 1/1/2017, AB Company has 20000 shares of $5 par value common stock outstanding at an...

On 1/1/2017, AB Company has 20000 shares of $5 par value common stock outstanding at an average issue price of $41 per share. On June 1, the company acquired 1700 shares of its own outstanding common stock for $40 per share. The company uses the "cost method" to account for transactions involving the acquisition of its own shares and reissuance of such shares. On July 1, AB Company reissued 700 treasury shares for $43 per share. On November 1, AB Company reissued 900 treasury shares at $39 per share. On December 1, AB Company decided to retire the remaining treasury shares. Prepare the journal entries to record the treasury stock transactions

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Answer #1

Journal entry :

Date account and explanation debit credit
June 1 Treasury Stock (1700*40) 68000
Cash 68000
(To record treasury Stock)
July 1 Cash (700*43) 30100
Treasury Stock (700*40) 28000
Paid in capital from sale of treasury stock 2100
(To record reissue of treasury Stock)
Nov 1 Cash (900*39) 35100
Paid in capital from sale of treasury stock 900
Treasury Stock 36000
(To record reissue treasury Stock)
Dec 1 Common Stock (100*5) 500
Paid in capital in excess of par value (100*36) 3600
Retained earnings 100
Treasury Stock (100*40) 4000
(To record retirement)
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