Treasury Stock Transactions Lawn Spray Inc. develops and produces spraying equipment for lawn maintenance and industrial uses. On January 31 of the current year, Lawn Spray Inc. reacquired 50,000 shares of its common stock at $51 per share. On June 14, 24,000 of the reacquired shares were sold at $60 per share, and on November 23, 18,000 of the reacquired shares were sold at $56. a. Journalize the transactions of January 31, June 14, and November 23. For a compound transaction, if an amount box does not require an entry, leave it blank.

Answer and Explanation:

The journal entries are shown below:

On Jan 31

Treasury stock (50,000 shares × $51)$2,550,000  

            To cash  $2,550,000

(being the reacquired shares are recorded)

For recording this we debited the treasury stock as it increased the blaance of treasury stock and credited the cash as it reduced the assets

On June 14

Cash (24,000 shares × $60 )$1,440,000  

         To Treasury stock (24,000 shares × $51)  $1,224,000

         To Paid-In Capital from Sale of Treasury Stock  $216,000

(Being the reacquired shares are sold)

For recording this we debited the cash as it increased the assets and credited the treasury stock and paid -in the capital as it reduced the treasury stock balance and increased the stockholder equity

On Nov 23

Cash (18,000 shares × $56 )$1,008,000  

          To Treasury stock (18,000 shares × $51)  $918,000

          To Paid-In Capital from Sale of Treasury Stock  $90,000

(Being the reacquired shares are sold)

For recording this we debited the cash as it increased the assets and credited the treasury stock and paid -in the capital as it reduced the treasury stock balance and increased the stockholder equity