Question

Swifty Corporation issued 100000 shares of $10 par common stock for $1250000. A year later Swifty acquired 15900 shares of its own common stock at $15 per share. Three months later Swifty sold 8500 of these shares at $19 per share. If the cost method is used to record treasury stock transactions, to record the sale of the 8500 treasury shares, Swifty should credit

Answer 1

the journal entries should be:

Dr Cash 1,250,000

Cr Common stock 1,000,000

Cr Additional paid in capital 250,000

Dr Treasury stock 238,500

Cr Cash 238,500

Dr Cash 161,500

Cr Common stock 85,000

Cr Additional paid in capital 76,500