The Magic Flute Company provides the following information from the Stockholders' Equity section of the balance sheet:
Common Stock, $1 par value, 200,000 shares issued and outstanding
$200,000
Additional Paid-in Capital in Excess of Par—Common
1,400,000
Retained Earnings
1,520,000
Total stockholders' Equity
3,120,000
Magic Flute had the following transactions related to treasury shares:
January 1 Acquired 30,000 shares of its common stock in the open market for $12 per share
March 1 Sold 5,000 shares for $16
April 1 Sold 5,000 shares for $6
May 1 Retired 5,000 treasury shares
Prepare the necessary journal entries to record all treasury stock transactions.
What will be an ideal response?
Answer:
Jan 1
Treasury Stock
360,000
Cash
360,000
Mar 1
Cash
80,000
Treasury stock
60,000
Paid-in-Capital Treasury Stock
20,000
Apr 1
Cash
30,000
Paid-in-Capital Treasury Stock
20,000
Retained Earnings
10,000
Treasury Stock
60,000
May 1
Common Stock
5,000
Addl. Paid-in-Capital—Common Stock
35,000
Retained Earnings
20,000
Treasury Stock
60,000
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