On July 1, Chesapeake Corporation purchases 550,000 shares of its $6 par value c
ID: 2376890 • Letter: O
Question
On July 1, Chesapeake Corporation purchases 550,000 shares of its $6 par value common stock for the treasury at a cash price of $10 per share. On September 1, it sells 275,000 shares of the treasury stock for cash at $13 per share. The balance in the retained earnings account is $6,345,000.
Instructions: Journalize the two treasury stock transactions.
On July 1, Chesapeake Corporation purchases 550,000 shares of its $6 par value common stock for the treasury at a cash price of $10 per share. On September 1, it sells 275,000 shares of the treasury stock for cash at $13 per share. The balance in the retained earnings account is $6,345,000.Explanation / Answer
July 1
DR Treasury stock 5,500,000
CR Cash 5,500,000
September 1
DR Cash 3,575,000 (275000*13= 3,575,000)
CR Treasury stock 2,750,000 (275,000*10=2,750,000)
CR Paid in cap per treasury stock. 825,000
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