Question

In 2018, Western Transport Company entered into the treasury stock transactions described below. In 2016, Western Transport had issued 140 million shares of its $1 par common stock at $17 per share.

Required:
Prepare the appropriate journal entry for each of the following transactions: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

On January 23, 2018, Western Transport reacquired 10 million shares at $20 per share.

On September 3, 2018, Western Transport sold 1 million treasury shares at $21 per share.

On November 4, 2018, Western Transport sold 1 million treasury shares at $18 per share.

Answer 1

Explanation:

The journal entries are shown below:

On January 2013

Treasury stock Dr $200 million      ($10 million shares × $20)

      To Cash $200 million

(Being the purchase of stock is recorded)

On September 3, 2018

Cash Dr $21 million                    ($1 million shares × $21)

      To Treasury stock $20 million    ($1 million shares × $20)

      To Paid in capital in share purchase $ 1 million

(Being the sale of treasury stock is recorded)

On November 4,2018

Cash $18 million  ($1 million shares × $18)

Paid in capital in share purchase $1 million

Retained earnings $1 million

            To Treasury stock $20 million      ($1 million shares × $20)

(Being the sale of treasury stock is recorded)

Answer 2

Explanation

1.

January 23, 2021:

Treasury stock (10 million shares × $20) = $200 million.

 

2.

September 3, 2021:

Cash (1 million shares × $21) = $21 million.

Treasury stock (1 million shares × $20) = $20 million.

 

3.

November 4, 2021:

Cash (1 million shares × $18) = $18 million.

Treasury stock (1 million shares × $20) = $20 million.