Question

On July 1, Raney Corporation purchases 690 shares of its $4 par value common stock for the treasury at a cash price of $9 per share. On September 1, it sells 440 shares of the treasury stock for cash at $11 per share.Journalize the two treasury stock transactions. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answer 1

Answer:

Date      Particular                                       Dr.        Cr.

Jul-1       Treasury stock                          $6,210

             Cash                                                         $6,210

Sep-1     Cash                                          $4,840

             Treasury stock                                         $3,960

             Paid-in capital - Treasury stock              $880

Explanation:

Treasury stocks are the company's own shares which is repurchased by the company. It is recorded in treasury shares account which is an contra equity account. I can be reissued or cancelled by the company.

Purchase of Treasury Stock

Treasury Stock = 690 x $9 = $6,210

Sales of Treasury Stock

Cash Receipt = 440 x $11 = $3,300

Treasury Stock = 440 x $9 = $3,960

Paid-in capital - Treasury stock = 440 x $2 = $880

Answer 2

Based on the information given the two treasury stock transactions journal entries are:

Raney Corporation journal entries

July 1

Debit Treasury stock $6,210

Credit Cash  $6,210

(690×$9)  

Sep 1

Debit Cash  $4,840

(440×$11)  

Credit Treasury stock $3,940

(440×$9)  

Credit Paid in capital in excess of par - Treasury stock $880

[($11-$9)×$440]

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