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Treasury Stock

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 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 ...

Solution Summary

The solution explains the journal entries for treasury stock under the cost method

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