Camby Corporation\'s balance sheet reported the following: Capital stock outstan

Question

Camby Corporation's balance sheet reported the following:

         Capital stock outstanding, 5,000 shares, par $30 per share                                   $150,000

         Paid-in capital in excess of par                                                                                    80,000

         Retained earnings                                                                                                      100,000

The following transactions occurred this year:

(a)   Purchased 200 shares of capital stock to be held as treasury stock, paying $60 per share.

(b)   Sold 150 of the shares of treasury stock at $65 per share.

(c)   Sold the remaining shares of treasury stock at $50 per share.

Instructions

Prepare the journal entry for these transactions under the cost method of accounting for treasury stock.

Explanation / Answer

a) DR Treasury stock 12,000

CR Cash 12,000

b) DR Cash 9,750

CR Treasury Stock 9,000

CR Paid in capital treasury stock 750

C) DR Cash 2,500

DR Paid in capital -treasury stock 500

CR Treasury Stock 3,000

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