In 2013, Southwestern Corporation completed the treasury stock transactions listed below.

February 2: Reacquired 70,000 shares at $12.

March 17: Sold 20,000 shares at $14.

May 17: Sold 25,000 shares at $8.

Southwestern had issued 100,000 shares of its $1 par common stock for $10 several months ago.

Required:

Prepare the journal entries to record the above transactions using the cost method.

Journal entries

Explanation:

On Feb 2

Treasury Stock Dr $840,000 (70,000 shares * $12)

To Cash $840,000

(Being the required shares is recorded)

On March 12

Cash Dr $280,000 (20,000 shares * $14)

To Treasury Stock $240,000 (20,000 shares * $12)

To Additional Paid-In Capital $40,000

(Being the sale of shares is recorded)

On March 17

Cash $200,000 (25,000 shares * $8)

Discount on Capital Dr $100,000

To Treasury stock $300,000 (25,000 shares * $12)

(Being the sale of shares is recorded)

Only these above entries are passed