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Treasury stock transactions

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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.

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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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See Also This Related BrainMass Solution

Treasury Stock Transactions and Presentation - Jodz Company

P15-2 (Treasury Stock Transactions and Presentation) Jodz Company had the following stockholders' equity as of January 1, 2004.

Common stock, $5 par value, 20,000 shares issued $100,000
Paid-in capital in excess of par 300,000
Retained earnings 320,000
Total stockholders' equity $720,000

During 2004, the following transactions occurred.

Feb. 1 Jodz repurchased 2,000 shares of treasury stock at a price of $18 per share.

Mar. 1 800 shares of treasury stock repurchased above were reissued at $17 per share.

Mar. 18 500 shares of treasury stock repurchased above were reissued at $14 per share.

Apr. 22 600 shares of treasury stock repurchased above were reissued at $20 per share.

Instructions
(a) Prepare the journal entries to record the treasury stock transactions in 2004, assuming Jodz uses the cost method.

(b) Prepare the stockholders' equity section as of April 30, 2004. Net income for the first 4 months of 2004 was $110,000.

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