Question

On May 27, Hydro Clothing Inc. reacquired 65,000 shares of its common stock at $6 per share. On August 3, Hydro Clothing sold 48,000 of the reacquired shares at $9 per share. On November 14, Hydro Clothing sold the remaining shares at $5 per share.
Journalize the transactions of May 27, August 3, and November 14.

Answer 1

Answer:

May 27

Dr Treasury Stock $390,000

Cr Cash $390,000

Aug. 3

Dr Cash $432,000

Cr Treasury Stock $288,000

Cr Paid-In Capital from Sale of Treasury Stock $144,000

Nov. 14

Dr Cash $85,000

Dr Paid-In Capital from Sale of

Treasury Stock $17,000

Cr Treasury Stock $102,000

Explanation:

Preparation of the journal entries of May 27, August 3, and November 14.

May 27

Dr Treasury Stock $390,000

(65,000 shares × $6)

Cr Cash $390,000

Aug. 3

Dr Cash $432,000

(48,000 shares × $9)

Cr Treasury Stock $288,000

(48,000 shares × $6)

Cr Paid-In Capital from Sale of Treasury Stock $144,000

[48,000 shares × ($9– $6)]

Nov. 14

Dr Cash $85,000

(17,000 shares × $5)

Dr Paid-In Capital from Sale of

Treasury Stock $17,000

[17,000 shares × ($6 – $5)]

Cr Treasury Stock $102,000

(17,000 shares *$6)

(65,000 shares-48,000 shares=17,000 shares )