On January 1, the sanders corporation had 1,000 shares of $10 par common stock a
ID: 2376924 • Letter: O
Question
On January 1, the sanders corporation had 1,000 shares of $10 par common stock authorized and outstanding. These shares were originally issued at a price of $26 per share. In addition, 500 shares of $50 par preferred stock were outstanding. These were issued at a price of $75 per share. During the year the following stock transactions occurred:
1. March 3: Sanders corporation reacquired 100 shares of its own common stock at a cost of $22 per share.
2. April 27: It sold 25 shares of the stock on March 3 for $25 per share.
3. July 10: It sold 25 shares of the stock acquired on March 3 for $20 per share.
4. October 12: It retired the remaining shares acquired on March 3.
Required
Prepare journal entries to record the treasury stock transactions of Sanders Corporation assuming it uses the cost method.
Explanation / Answer
1.
D: Treasury stock (100*24) $2,400
C: Cash $2,400
2.
D: Cash (25*$30) $750
C: Treasury Stock (25*$24) $600
C: Additional Paid-in Capital(25*$6) $150
3.
D: Cash (25*$22) $550
D: Additional Paid-in Capital(25*$2) $50
C: Treasury Stock (25*$24) $600
4.
D: Common Stock (50*$10 par) $500
D: Premium in common stock $700 ****
C: Treasury Stock (50*24) $1200
**** Or debit at Additional Paid-in Capital for $100 and $600 in Premium in Common Stock