Question

On January 1, Vermont Corporation had 40,000 shares of $10 par value common stock issued and outstanding. All 40,000 shares had been issued in a prior period at $20.00 per share. On February 1, Vermont purchased 3,750 shares of treasury stock for $24 per share and later sold the treasury shares for $21 per share on March 1. ​ The journal entry to record the purchase of the treasury shares on February 1 would include a

Answer 1

Credit to Treasury Stock for $90,000

Step-by-step explanation:

Answer 2

Step-by-step explanation:

The journal entry is shown below:

Treasury Stock A/c Dr $90,000

To Cash A/c $90,000

(Being treasure stock is purchased for cash)

The computation is shown below:

= Treasury shares purchased × value per share

= 3,750 shares × $24

= $90,000

We simply debited the treasury stock account and credited the cash account so that the correct posting can be done