The Cosmo Company was started by issuing 800 shares of $10 par value stock at an average market price of $20 per share. The company repurchased 100 shares at a market price of $15 per share. The company later sold 50 shares at a market price of $25 per share. At the end of the first year of operations the company has $2,600 of retained earnings in addition to its contributed capital.
a. Prepare journal entries to record the treasury stock transactions.
We would need to record the transactions as follows:
Treasury stock 1500 (100 x 15)
Cash (50 x 25) ...
This solution prepares journal entries to record treasury stock transactions for Cosmo Company. This solution also prepares the equity section of the balance sheet. All work and calculations are shown and explained. Includes 1 reference.