Elroy Corporation repurchased 4,000 shares of its own stock for $30 per share. The stock has a par of $10 per share. A month later Elroy resold 900 shares of the treasury stock for $32 per share.

Required:

a. Record the two events in general journal format. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

b. What is the balance of the treasury stock account after these transactions?

a.

The journal entry is as follows which is shown below:

b.

Balance in Treasury stock is $93,000

Explanation:

a.

The journal entries which is to be recorded as:

Shares repurchased for $30 per share:

Treasury Stock A/c ... Dr $120,000

Cash A/c ... Cr $120,000

Shares resold for $32 per share:

Cash A/c ... Dr $28,00

Treasury Stock A/c ... Cr $27,000

Paid in capital from Treasury Stock A/c ... Cr $1,800

Working Note:

Treasury Stock = Number of shares * Rate per share

= 4,000 * $30

= $120,000

Cash = Number of shares * Rate per share

= 900 * $32

= $28,800

Treasury Stock = Number of shares * Rate per share

= 900 * $30

= $27,000

Paid in capital from Treasury Stock = Cash - Treasury Stock

= $28,800 - $27,000

= $1,800

b.

Balance in Treasury Stock is computed as:

Balance in Treasury stock = Purchase of treasury stock - Cost of treasury stock sold

= $120,000 - $27,000

= $93,000