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In: Accounting

20. Comfort realty purchases 3,000 shares of its $50 par value common stock for $180,000 cash...

20. Comfort realty purchases 3,000 shares of its $50 par value common stock for $180,000 cash on July 1. It will hold the shares in the treasury until resold. On November 1, the corporation sells 1,000 shares of treasury stock for cash at $70 per share. Journalize the treasury stock transactions

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Expert Solution

Treasury stock are stock that has been purchased by the company in the open market which are companies own stock. These shares are not shown as an asset in the balance sheet but shown as a contra equity account

Date

General Journal

Debit

Credit

Jul-01

Treasury stock

$    1,80,000.00

           Cash

$ 1,80,000.00

(Top record purchase of treasury stock at $60 per share)

Nov-01

Cash

$       70,000.00

        Treasury stock

$      60,000.00

         Paid in capital- Treasury stock

$      10,000.00

(To record sale of treasury stock)

Only the cost of purchasing the treasury stock will be credited with treasury stock account when they are sold again additional cash received will be credited to paid in capital- treasury stock account.

Date

General Journal

Debit

Credit

Jul-01

Treasury stock

=3000*60

           Cash

=3000*60

(Top record purchase of treasury stock at $60 per share)

Nov-01

Cash

=1000*70

        Treasury stock

=1000*60

         Paid in capital- Treasury stock

=1000*10

(To record sale of treasury stock)

ekkarill92 answered 10 months ago
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