Ask Question
11 October, 06:14

Sprinkle Inc. has outstanding 10,000 shares of $10 par value common stock. On July 1, 2020, Sprinkle reacquired 100 shares at $87 per share. On September 1, Sprinkle reissued 60 shares at $90 per share. On November 1, Sprinkle reissued 40 shares at $83 per share.

Prepare Sprinkle's journal entries to record these transactions using the cost method.

+2
Answers (1)
  1. 11 October, 06:44
    0
    July 1, 2020

    Dr. Treasury Shares $8,700

    Cr. Cash $8,700

    September 1, 2020

    Dr. Cash $5,400

    Cr. Treasury Shares $5,220

    Cr. Paid-In-Capital Treasury Stock $180

    November 1, 2020

    Dr. Cash $3,320

    Dr. Paid-In-Capital Treasury Stock $160

    Cr. Treasury Shares $3,480

    Explanation:

    Treasury stock is the share of the company issued earlier and bought-back. It can be reissued and cancelled by the company.

    Treasury Shares = 100 x $87 = $8,700

    Issuance

    All the difference in the issuance of treasury stock will be transferred to Paid-In-Capital Treasury Stock account.

    September 1, 2020

    Proceeds = 60 x $90 = $5,400

    Cost = 60 x $87 = $5,220

    Paid-In-Capital Treasury Stock = $5,400 - $5,220 = $180

    November 1, 2020

    Proceeds = 40 x $83 = $3,320

    Cost = 40 x $87 = $3,480

    Paid-In-Capital Treasury Stock = $5,400 - $5,220 = $180
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Sprinkle Inc. has outstanding 10,000 shares of $10 par value common stock. On July 1, 2020, Sprinkle reacquired 100 shares at $87 per ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers