Question

Accounting for Treasury Stock On February 1, 2019, Destiny Enterprise repurchases 750 shares of its outstanding common stock for $9 per share. On March 1, 2019, Destiny sells 270 shares of treasury stock for $12 per share. On May 10, 2019, Destiny sells the remaining 480 shares of its treasury stock for $6 per share.
Required:
Prepare the journal entries to record these transactions.

2019 Feb. 1
Treasury Stock
Cash
(Record purchase of treasury shares) Mar. 1
Cash
Treasury Stock
Additional Paid-In Capital - Treasury Stock
(Record reissue of treasury shares) May 10
Cash
Additional Paid-In Capital - Treasury Stock
Retained Earnings
Treasury Stock (Record reissue of treasury shares)

Answer 1

Journal entry:

Feb-1:  Dr Treasury stock ( 750*9)   6750

                     Cr Cash                                 6750

               (To record purchase of treasury stock)

March-1: Dr Cash ( 270*12)    3240

                          Treasury stock    ( 270* 9)   2430

                           Paid up capital                     810

               (To record sale of shares above cost)

March-10 : Dr Cash (480 * 6)      2880

                 Dr Paid up capital     1440

                            Cr Treasury stock       4320

           (To record sales of shares less cost)

Answer 2

Answer:

The necessary journal entries to record the issues and repurchase of common stock are included in the attached spreadsheet

Explanation:

It is noteworthy that the price of $9 is the par value of common stock ,which implies that any issue at a price beyond that has its issue price comprises of the par value of $9 and the remainder as paid-in capital in excess of par value.

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