Treasury Stock, Cost and par Value Methods On january 1, West Company had outsta

Question

Treasury Stock, Cost and par Value Methods

On january 1, West Company had outstanding 10,000 shares of $10 par common stock, which had been originally issued at an average price of $35 per share> during the year, West engaged in the following treasury stock transaction:

1. Reacquired 1,000 shares of its common stock for $33 per share

2. Reissued 600 shares of the treasury stock for $35 per share

3. Reissued 300 shares of the treasury stock for $32 per share

4. Retired the remaining 100 shares of treasury syock

1.Prepare journal entries to record the preceding treasury stock transactions for West Company assuming it uses the cost method. For compond entries, if an amount box does not require an entry, leave it blank.

2. Prepare journal entries to record the preceding treasury stock transactions for West Company assuming it uses the par value method. For compound entries, if an amount does not require an entry leave it blank

Explanation / Answer

cash(db) 10,000*35=$350,000

common stock(cr)=10000*10=$100,000

add paid in capital (cr) $250,000

1)treaury stock (db) 1000*33=$33,000

cash (cr)$33,000

2)cash (db) 600*35=$21,000

trasury stock (cr) 600*33=$19,800

add paid in capital (cr) 1,200

3)cash (db) 600*32=$19,200

trasury stock (cr) 600*33=$19,8,00

add paid in capital (db) 600

4)

common stock (db) 100*10=$1,000

add paid in capital (db) 2200

trasury stock (cr) 100*33=$3,300

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