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18 June, 23:38

California Surf Clothing Company issues 1,000 shares of $1 par value common stock at $20 per share. Later in the year, the company decides to Purchase 100 shares at a cost of $23 per share. Record the transaction if California Surf resells the 100 shares of treasury stock at $25 per share. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

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  1. 18 June, 23:57
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    Dr. Cash $2,500

    Cr. Treasury Shares $2,300

    Cr. Paid-In-Capital Treasury Stock $200

    Explanation:

    Treasury stock is the share of the company issued earlier and bought-back. It can be reissued and cancelled by the company.

    At the time of repurchase

    Treasury Shares = 100 x $23 = $2,300

    Dr. Treasury Stock $2,300

    Cr. Cash $2,300

    At the time of Resale

    All the difference in the issuance of treasury stock will be transferred to Paid-In-Capital Treasury Stock account.

    Proceeds = 100 x $25 = $93,600

    Paid-In-Capital Treasury Stock = $2,500 - $2,300 = $200
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