On January 1, Vermont Corporation had 40,000 shares of $10 par value common stock issued and outstanding. All 40,000 shares had been issued in a prior period at $20.00 per share. On February 1, Vermont purchased 3,750 shares of treasury stock for $24 per share and later sold the treasury shares for $21 per share on March 1. The journal entry to record the purchase of the treasury shares on February 1 would include a

Question

Hunter Kelly

Business

13 March, 01:05

On January 1, Vermont Corporation had 40,000 shares of $10 par value common stock issued and outstanding. All 40,000 shares had been issued in a prior period at $20.00 per share. On February 1, Vermont purchased 3,750 shares of treasury stock for $24 per share and later sold the treasury shares for $21 per share on March 1. The journal entry to record the purchase of the treasury shares on February 1 would include a

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Fiesta · Answer 1

The journal entry is shown below:

Treasury Stock A/c Dr $90,000

To Cash A/c $90,000

(Being treasure stock is purchased for cash)

The computation is shown below:

= Treasury shares purchased * value per share

= 3,750 shares * $24

= $90,000

We simply debited the treasury stock account and credited the cash account so that the correct posting can be done