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    MaycieGracie's Avatar
    MaycieGracie Posts: 3, Reputation: 1
    New Member
    		  
    #1

    Jun 18, 2007, 10:25 AM
    Treasury Stock
    Hi I need some help on this question. Prepare in journal form the following entries.
    1 Oct 1 Purchased 1,000 shares of it's own $2 par value common stock for $20 per share, the current market price
    2. Sold 250 shares of treasury stock purchased on Oct 1 for $25 per share.
    3. Sold 400 shares of treasury stock purchased on October 1 for $18 per share.

    here's my answers please help me if I did them wrong.
    1. Treasury stock, common 20,000
    cash 20,000
    2 Cash 6,250
    treasury stock, common 4,800
    PIC 1,450
    3. Cash7,200
    PIC
    Retained earning
    Treasury stock common 8,000

    As you can see I am having a hard time on #3 please someone help me on what I did wrong! Thanks
    bhet's Avatar
    bhet Posts: 77, Reputation: 9
    Junior Member
    		  
    #2

    Jun 20, 2007, 03:16 AM
    #3
    dr. cash 7200
    dr. PIC-treasury stock 800
    Cr. Treasuy stock 8000

    Since in the second transaction, you have a balace of PIC - TS (treasury stock) it will absorb any losses on transactions involoving TS. If the PIC - TS balance is already zero, that is the time that we would debit Retaines earnings.
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