Question

Record journal entries for the following events for Mind the GAAP, Inc.1. On December 1, 2019, Mind the GAAP repurchased 5,000 shares of its $2 par common stock at a price of $30 per share. This was the company’s first share repurchase.

Answer 1

Mind GAAP has repurchased the 5000 shares of its $2 par common stock at a price of $30 per share.

In case when the stocks are repurchased then it is to be treated as treasury stock. In case of repurchase at price above or below the par value will not be treated as additional paid up capital when repurchased.

But it will be adjusted with the additional paid up capital once it is re issued at premium or discount.

Here only repurchase is happening so treasury stock will be debited and to get it cash paid is credited. Here $30 per stock is repurchase price for 5000 shares hence total value of repurchase = $150000 (5000*30)

The Journal Entry will be as follows:

Date	Particulars	Debit ($)	Credit ($)
1st Dec 2019	Treasury Stock	150000
	To Cash		150000
	( 5000 Stock Repurchased @30 per share)