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26 March, 07:11

During the year the following selected transactions affecting stockholders' equity occurred for Orlando Corporation: a. Apr. 1 Repurchased 260 shares of the company's own common stock at $30 cash per share. b. Jun. 14 Sold 130 of the shares purchased on April 1 for $35 cash per share. c. Sept. 1 Sold 120 of the shares purchased on April 1 for $25 cash per share.

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  1. 26 March, 07:25
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    April 1

    DR Treasury Stock $7,800

    CR Cash $7,800

    (To record purchase of Treasury Stock)

    Working

    Treasury Stock = 260 shares * $30

    = $7,800

    June 14

    DR Cash $4,550

    CR Treasury Stock $ 3,900

    CR Additional Paid-in Capital $ 650

    (To record sale of Treasury Stock)

    Working

    When the stock sold is higher or lower than the price it was purchased or issued for, it is credited or debited to the Additional Paid-in Capital account respectively.

    As the price it was sold for here was higher than what it was purchased for, the balance is credited.

    Cash = 130 shares * $35

    = $4,550

    Treasury Stock = 130 * $30 (original price)

    = $3,900

    Additional Paid-in Capital = 4,550 - 3,900

    = $650

    Sept 1.

    DR Cash $3,000

    DR Additional Paid-in Capital $600

    CR Treasury Stock $3,600

    (To record sale of Treasury Stock)

    Working

    Price stock was sold for is less than the amount it was purchased so the balance will be debited to the Additional Paid-in Capital account.

    Cash = 120 * 25

    = $3,000

    Treasury Stock = 120 * 30

    = $3,600

    Additional Paid-in Capital = 3,600 - 3,000

    = $600
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