Question

Promising Corp starts the year with 25,000 shares of $1 par common stock issued at an average cost of $24 each. Record each of the following sequential entries.1.) Repurchase 2,000 shares for $18 each; 2.) Sell 1,000 of the shares in #1 for $26 each; 3.) Sell 800 shares of the stock repurchased in #1 for $9 each; 4.) Retire the remaining 200 shares repurchased in #1.

After the 4th entry, how many shares are issued? Outstanding?

Answer 1

Solution:

Journal Entries
Date	Particulars	Debit	Credit
1	Treasury Stock A/c Dr (2000*$18)	$36,000.00
	To Cash		$36,000.00
	(To record repurchase of 2000 shares)
2	Cash Dr (1000*$26)	$26,000.00
	To Treasury Stock (1000*18)		$18,000.00
	To Additional Paid in Capital-Treasury Stock		$8,000.00
	(To record sale of 1000 treasury stock)
3	Cash Dr (800*$9)	$7,200.00
	Additional Paid in Capital-Treasury Stock Dr	$7,200.00
	To Treasury Stock (800*18)		$14,400.00
	(To record sale of 800 treasury stock)
4	Common Stock Dr (200*$1)	$200.00
	Additional Paid in Capital in excess of Par Dr	$3,400.00
	To Treasury Stock (200*$18)		$3,600.00
	(To record retired remaining treasury stock)

Shares issued and outstanding = beginning shares - shares retired = 25000 - 200 = 24,800 shares