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29 May, 02:55

g During fiscal 2011, we repurchased with cash (i. e., bought) 2 million shares of common stock for an aggregate purchase cost of $700 million. We reissued (i. e., sold) 5 million shares of common stock held in treasury for $2000 million in cash during fiscal 2011. The cost basis of the 5 million shares of treasury stock reissued is $300 per share. What journal entries did ALM record in its treasury stock transactions in 2011

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  1. 29 May, 03:06
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    Dr. Treasury Stock $700 million

    Cr. Cash $700 million

    Dr. Cash $2,000 million

    Cr. Add-in-Capital Treasury Stock $500 million

    Cr. Treasury Stock $1,500 million

    Explanation:

    Treasury stocks are the company's own shares which is repurchased by the company. It is recorded in treasury shares account which is an contra equity account. I can be reissued or cancelled by the company.

    Purchase of Treasury Stock

    Treasury Stock = $700 million

    Sales of Treasury Stock

    Cash Receipt = $2,000

    Treasury Stock = 5 million x $300 = $1,500

    Paid-in capital - Treasury stock = $2,000 - $1,500 = $500
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