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11 June, 03:17

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

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  1. 11 June, 05:52
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    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
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