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2 March, 09:50

On January 1, 2018, the stockholders' equity section of Nance Corporation shows: Common stock ($2 par value) $1,200,000; paid-in capital in excess of par value $2,500,000; and retained earnings $1,000,000. During the year, the following treasury stock transactions occurred.

Mar. 1 Purchased 30,000 shares for cash at $22 per share.

Jul. 1 Sold 6,000 treasury shares for cash at $27 per share.

Sept. 1 Sold 5,000 treasury shares for cash at $19 per share.

Dec. 1 Sold 5,000 treasury shares for cash at $12 per share.

Prepare the journal entries.

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  1. 2 March, 10:03
    0
    Date Particulars Debit Credit

    Mar. 1 Treasury Stock (30,000*22) 660,000

    Cash 660,000

    Jul. 1 Cash (6,000*27) 162,000

    Paid in Capital from Treasury Stock 30,000

    Treasury Stock (6,000*22) 132,000

    Sep. 1 Cash (5,000*19) 95,000

    Paid in Capital from Treasury Stock 15,000

    Treasury Stock (5,000*22) 110,000

    Dec. 1 Cash (5,000*12) 60,000

    Paid in Capital from Treasury Stock 50,000

    Treasury Stock (5,000*22) 110,000

    Note: When company sold out the Treasury Stock more than its purchase price, the Paid in Capital increases from Treasury Stock and recorded as credit. However, when company sold Treasury Stock less than its purchase price, the Paid in Capital decreases from Treasury Stock and recorded as debit.
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