Question

Sheridan Company originally issued 4800 shares of $10 par value common stock for $144000 ($30 per share). Sheridan subsequently purchases 470 shares of treasury stock for $25 per share and resells the 470 shares of treasury stock for $30 per share.
Required:
1. Journalize the two treasury stock transactions.

Answer 1

Answer:

Following journal entries would be recorded:

Cash A/C                                                                Dr. $144000

    To Common Stock (4800 shares × 10)                                   48000

    To Paid in capital  A/C (4800 shares × 20)                             96000

(Being issue of common stock recorded)

Treasury Stock A/C (470 × 25)                       Dr. 11750

       To Cash A/C                                                            11750

(Being purchase of 470 shares recorded)

Cash A/c  (470 shares × 30)                           Dr 14100

     To Treasury Stock A/C (470 × 25)                                 11750

     To Paid in capital from treasury stock                             2350

(Being sale of treasury stock being recorded)