Treasury Stock
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Camby Corporation's balance sheet reported the following:
Capital stock outstanding, 5,000 shares, par $30 per share $150,000
Paid-in capital in excess of par 80,000
Retained earnings 100,000
The following transactions occurred this year:
(a) Purchased 120 shares of capital stock to be held as treasury stock, paying $60 per share.
(b) Sold 90 of the shares of treasury stock at $65 per share.
(c) Sold the remaining shares of treasury stock at $50 per share.
Instructions
Prepare the journal entry for these transactions under the cost method of accounting for treasury stock.
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Solution Summary
The solution explains the journal entries for treasury stock under the cost method
Solution Preview
(a) Purchased 120 shares of capital stock to be held as treasury stock, paying $60 per share.
When 120 shares are purchased, the total cost is 120X60=7,200. The entry is
Treasury Stock Dr 7,200
Cash Cr 7,200
(b) Sold 90 of the shares of treasury stock at $65 per share.
Under the cost method, when ...
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