Question

1. On January 1, 2015, the stockholders’ equity section of Martin Corporation shows: common stock ($5 par value) $2,000,000; paid-in capital in excess of par value $1,200,000; and retained earnings $1,400,000. During the year, the following treasury stock transactions occurred.

Mar. 1    Purchased 60,000 shares for cash at $18 per share.

July 1      Sold 15,000 treasury shares for cash at $19 per share.

Sept. 1    Sold 10,000 treasury shares for cash at $17 per share.

Instructions:

1. Journalize the treasury stock transactions.

Answer 1

--Requirement [a] Journal entries required

Date	Accounts title	Debit	Credit
01-Mar	Treasury Stock (60000 shares x $18)	$1,080,000
	Cash		$1,080,000
	(to record repurhcase)
01-Jul	Cash (15000 shares x $ 19)	$285,000
	Treasury Stock (15000 shares x $ 18)		$270,000
	Paid in Capital from Treasury Stock		$15,000
	(to record re issuance)
01-Sep	Cash (10000 shares x $ 17)	$170,000
	Paid in Capital from Treasury Stock	$10,000
	Treasury Stock (10000 shares x $ 18)		$180,000
	(to record re issuance)