Q3TI - Horngren'S Financial And Managerial Accounting

Question

On January 3, Halsall Corporation purchased 2,000 shares of the company’s \(2 par value common stock as treasury stock, paying cash of \)8 per share. On January 30, Halsall sold 1,200 shares of the treasury stock for cash of $10 per share. Journalize these transactions.

Step-by-Step Solution

Answer

Treasury stock debited by $16,000 and Cash credited by $16,000. 

Cash debitedby $12,000, Treasury Stock credited by$9,600 andPaid in capital in excess of parcreditedby $2,400 ()

Step 1: Basic calculation

$\begin{array}{c}\mathrm{TreasuryStockonJan}3=\mathrm{NumberofShare}\times \mathrm{ValuePerShare}\\ =2,000\times \$8\\ =\$16,000\end{array}$
$\begin{array}{c}\mathrm{TreasuryStockonJan}30=\mathrm{NumberofShare}\times \mathrm{ValuePerShare}\\ =1,200\times \$8\\ =\$9,600\end{array}$

$\begin{array}{c}\mathrm{PaidinCapitalExcessofPar}=\mathrm{NumberofShare}\times \mathrm{ValuePerShare}\\ =1,200\times \$8\\ =\$9,600\end{array}$

Step 2: Journals-

Date	Transaction	Debit	Credit
Jan 3	Treasury stock	$16,000
	Cash		$16,000
	To record purchase of treasury stock
Jan 30	Cash	$12,000
	Treasury Stock		$9,600
	Paid in capital in excess of par		$2,400
	To record sold treasury stock.