Question

Exercise 11-7

Rinehart Corporation purchased from its stockholders 5,300 shares of its own previously issued stock for $265,000. It later resold 1,600 shares for $53 per share, then 1,600 more shares for $48 per share, and finally 2,100 shares for $42 per share.

Prepare journal entries for the purchase of the treasury stock and the three sales of treasury stock.

Answer 1

Treasury stock [5300*$50]	$      2,65,000
Cash		$       2,65,000
[To record purchase of own shares]
Cash [1600*$53]	$          84,800
Paid in capital-Treasury stock		$             4,800
Treasury stock [1600*50]		$          80,000
[To record resale of treasury stock]
Cash [1600*$48]	$          76,800
Paid in capital-Treasury stock	$            3,200
Treasury stock [1600*50]		$          80,000
[To record resale of treasury stock]
Cash [2100*$42]	$          88,200
Paid in capital-Treasury stock[4800-3200]	$            1,600
Retained earnings	$          15,200
Treasury stock [2100*50]		$       1,05,000
[To record resale of treasury stock]