Question

Before Splish Corporation engages in the treasury stock transactions listed below, its general ledger reflects, among others, the following account balances (par value of its stock is $30 per share).

Paid-in Capital in Excess of Par—Common Stock		Common Stock		Retained Earnings
$106,500		$259,500		$80,000

Record the treasury stock transactions (given below) under the cost method of handling treasury stock; use the FIFO method for purchase-sale purposes. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

(a)		Bought 390 shares of treasury stock at $40 per share.
(b)		Bought 310 shares of treasury stock at $44 per share.
(c)		Sold 340 shares of treasury stock at $42 per share.
(d)		Sold 110 shares of treasury stock at $38 per share.

please explain detail

Answer 1

Solution:

Journal Entries - Before Splish Corporation
Event	Particulars	Debit	Credit
a	Treasury Stock Dr (390*$40)	$15,600.00
	To Cash		$15,600.00
	(To record purchase of treasury stock)
b	Treasury Stock Dr (310*$44)	$13,640.00
	To Cash		$13,640.00
	(To record purchase of treasury stock)
c	Cash Dr (340*$42)	$14,280.00
	To Treasury Stock (340*$40)		$13,600.00
	To Paid in capital from treasury stock		$680.00
	(To record sale of treasury stock)
d	Cash Dr (110*$38)	$4,180.00
	Paid in capital from treasury stock Dr	$460.00
	To Treasury stock (50*$40 + 60*$44)		$4,640.00
	(To record sale of treasury stock)