Question

a company reported the following stockholders’ equity on january 1 of the current year: common stock - $10 par value, 1,000,000 shares authorized; 252,000 shares issued $2,520,000 paid - in capital in excess of par value, common stock 1,262,000 retained earnings 1,677,000 total stockholders’ equity $5,459,000 prepare journal entries for the following selected transactions. march 1 purchased 10,200 shares of its own stock for $15 cash per share. may 5 sold 4,200 shares of its treasury stock for $15 cash per share. october 12 sold 2,200 shares of its treasury stock for $16 cash per share. view transaction list journal entry worksheet 1 2 3 purchased 10,200 shares of its own stock for $15 cash per share.

Explanation:

Step1: Record stock - purchase

When a company purchases its own stock (treasury stock), we debit the Treasury Stock account and credit the Cash account. The cost of the treasury - stock is calculated as the number of shares purchased times the price per share.
Debit: Treasury Stock ($10,200\times15$) = $153,000$
Credit: Cash $153,000$

Step2: Record first treasury - stock sale

When selling treasury stock at cost, we debit Cash and credit Treasury Stock. The amount is the number of shares sold times the cost per share.
Debit: Cash ($4,200\times15$) = $63,000$
Credit: Treasury Stock $63,000$

Step3: Record second treasury - stock sale

When selling treasury stock above cost, we debit Cash for the total amount received, credit Treasury Stock at cost, and credit Paid - in Capital from Treasury Stock for the excess amount.
The cost of the treasury stock sold is $2,200\times15 = 33,000$. The amount received is $2,200\times16=35,200$. The excess is $35,200 - 33,000 = 2,200$.
Debit: Cash $35,200$
Credit: Treasury Stock $33,000$
Credit: Paid - in Capital from Treasury Stock $2,200$

Answer:

Date	Account Titles and Explanation	Debit	Credit
	Cash		$153,000$
May 5	Cash	$63,000$
	Treasury Stock		$63,000$
October 12	Cash	$35,200$
	Treasury Stock		$33,000$
	Paid - in Capital from Treasury Stock		$2,200$