Answer:
April 1
DR Treasury Stock $7,800
CR Cash $7,800
(To record purchase of Treasury Stock)
Working
Treasury Stock = 260 shares * $30
= $7,800
June 14
DR Cash $4,550
CR Treasury Stock $ 3,900
CR Additional Paid-in Capital $ 650
(To record sale of Treasury Stock)
Working
When the stock sold is higher or lower than the price it was purchased or issued for, it is credited or debited to the Additional Paid-in Capital account respectively.
As the price it was sold for here was higher than what it was purchased for, the balance is credited.
Cash = 130 shares * $35
= $4,550
Treasury Stock = 130 * $30 (original price)
= $3,900
Additional Paid-in Capital = 4,550 - 3,900
= $650
Sept 1.
DR Cash $3,000
DR Additional Paid-in Capital $600
CR Treasury Stock $3,600
(To record sale of Treasury Stock)
Working
Price stock was sold for is less than the amount it was purchased so the balance will be debited to the Additional Paid-in Capital account.
Cash = 120 * 25
= $3,000
Treasury Stock = 120 * 30
= $3,600
Additional Paid-in Capital = 3,600 - 3,000
= $600
