Answer:
April 1
DR Treasury Stock <u>$7,800</u>
CR Cash <u>$7,800</u>
(<em>To record purchase of Treasury Stock</em>)
Working
Treasury Stock = 260 shares * $30
= $7,800
June 14
DR Cash <u>$4,550</u>
CR Treasury Stock <u>$ 3,900</u>
CR Additional Paid-in Capital <u>$ 650</u>
(<em>To record sale of Treasury Stock</em>)
Working
When the stock sold is higher or lower than the price it was purchased or issued for, it is credited or debited to the Additional Paid-in Capital account respectively.
As the price it was sold for here was higher than what it was purchased for, the balance is credited.
Cash = 130 shares * $35
= $4,550
Treasury Stock = 130 * $30 (original price)
= $3,900
Additional Paid-in Capital = 4,550 - 3,900
= $650
Sept 1.
DR Cash <u>$3,000</u>
DR Additional Paid-in Capital <u>$600</u>
CR Treasury Stock <u>$3,600</u>
(<em>To record sale of Treasury Stock</em>)
Working
Price stock was sold for is less than the amount it was purchased so the balance will be debited to the Additional Paid-in Capital account.
Cash = 120 * 25
= $3,000
Treasury Stock = 120 * 30
= $3,600
Additional Paid-in Capital = 3,600 - 3,000
= $600
