In 2018, Poe’s Products completed the treasury stock transactions described belo
ID: 2438618 • Letter: I
Question
In 2018, Poe’s Products completed the treasury stock transactions described below.
January 2: Reacquired 12 million shares at $18 per share.
February 15: Sold 4 million shares at $25 per share.
September 20: Sold 4 million treasury shares at $20 per share.
Poe’s Products had issued 60 million shares of its $1 par common stock for $20 several years ago.
Prepare any necessary journal entries to record the above transactions. Show all computations.
I am not sure what account to use. Is it Paid-in capital - share repurchase account or Paid-in capital excess of par account???
Explanation / Answer
Journal entry :
Date account and explanation debit credit Jan 2 Treasury stock (12*18) 216 Cash 216 (To record share repurchased) Feb 15 Cash (25*4) 100 Treasury stock (4*18) 72 Paid-in capital - share repurchase account (4*7) 28 (To record sold treasury shares) Sep 20 Cash (4*20) 80 Treasury stock (4*18) 72 Paid-in capital - share repurchase account (2*4) 8 (To record sold treasury shares)