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Treasury stock transactions

On January 1, 2010, the stockholders equity section of Lopez Corporation shows: Common stock ($5 par value) $1,500,000; paid-in capital in excess of par value $1,000,000; and retained earnings $1,200,000. During the year, the following treasury stock transactions occurred.
Mar. 1 Purchased 30,000 shares for cash at $15 per share.
July 1 Sold 6,000 treasury shares for cash at $17 per share.
Sept. 1 Sold 5,000 treasury shares for cash at $14 per share

(a) Journalize the treasury stock transactions.
(b) Restate the entry for September 1, assuming the treasury shares were sold at $12 per share.

Solution Preview

(a) The total amount paid is 30,000 X 15 = $450,000. The entry is
Mar. 1 Treasury Stock Dr 450,000
Cash Cr 450,000

When treasury stock is sold, the amount credited to treasury stock is the cost value. The difference (sale price higher than cost) is credited to paid in capital from treasury ...

Solution Summary

The solution explains the journal entries relating to treasury stock transactions

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