qs 13-17 (algo) purchase and sale of treasury stock lo p3\non may 3, zirbal corporation purchased 6,500…
qs 13-17 (algo) purchase and sale of treasury stock lo p3\non may 3, zirbal corporation purchased 6,500 shares of its own stock for $71,500 cash. on november 4, zirbal reissued 1,550 shares of this treasury stock for $18,600.\nprepare the may 3 and november 4 journal entries to record zirbals purchase and reissuance of treasury stock.\nview transaction list\njournal entry worksheet\n< 1 2 >\nrecord the purchase of 6,500 shares of its own stock for $71,500 cash.\nnote: enter debits before credits.\n| date | general journal | debit | credit |\n| may 03 | | | |
Answer
Explanation:
Step1: Record purchase of treasury stock
When a company purchases its own stock (treasury - stock), the Treasury Stock account is debited and Cash is credited. The cost of the treasury stock is $71,500. Debit: Treasury Stock $71,500 Credit: Cash $71,500
Step2: Record re - issuance of treasury stock
When treasury stock is re - issued, Cash is debited for the amount received ($18,600), and Treasury Stock is credited for the cost of the re - issued shares. First, we need to find the cost per share of the treasury stock when it was purchased. Cost per share = $\frac{71500}{6500}=11$ per share. The cost of 1,550 re - issued shares is $1,550\times11 = 17050$. The difference between the cash received and the cost of the re - issued shares ($18600 - 17050=1550$) is credited to Paid - in Capital from Treasury Stock. Debit: Cash $18,600 Credit: Treasury Stock $17,050 Credit: Paid - in Capital from Treasury Stock $1,550
Answer:
| Date | General Journal | Debit | Credit |
|---|---|---|---|
| May 3 | Treasury Stock | $71,500 | |
| Cash | $71,500 | ||
| November 4 | Cash | $18,600 | |
| Treasury Stock | $17,050 | ||
| Paid - in Capital from Treasury Stock | $1,550 |