Question

Greyson Corporation has 5,000 shares of $50 par value common stock outstanding. The company conducts the following treasury stock transactions:

1. Purchased 400 shares of its common stock at $62
2. Sold 60 treasury shares at $68
3. Sold 120 treasury shares at $60
4. Sold 100 shares at $58

Required

Prepare the journal entries necessary to record these transactions.

Answer 1

*Treasury stock is a corporation's own stock that it has issued and subsequently reacquired from shareholderes but not rtired.

*It follows under the cost method;

*Shares purchased - Debits, Treasury stock for the price paid to reacquire the shares.

*If shares selling above the cost;- Debit, Cash and Credit, Treasury Stock and Paid in capital from Treasury stock.

*If shares selling below the cost;- Debit, Cash and and Paid in capital from Treasury stock; Credit, Treasury Stock

Sno	Date	Particulars	DR.$	CR.$
1	XXX	Treasury stock	$   24,800
		cash		$   24,800
		(To record purchase of 400 shares of treasury stock at $62 per share)
2	xxx	Cash [$68]	$      4,080
		Treasury stock [$62]		$      3,720
		Paid in capital from Treasury stock [$6]		$         360
		( To record sale of 60 shares of treasury stock above cost)
3	xxx	Cash [$60]	$      7,200
		Paid in capital from Treasury stock [$2]	$         240
		Treasury stock [$62]		$      7,440
		( To record sale of 120 shares of treasury stock below cost)
4	xxx	Cash [$58]	$      5,800
		Paid in capital from Treasury stock [$4]	$         400
		Treasury stock [$62]		$      6,200
		( To record sale of 100 shares of treasury stock below cost)

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