Question

Sage Inc. has outstanding 10,600 shares of $10 par value common stock.

On July 1, 2020, Sage reacquired 105 shares at $87 per share.

On September 1, Sage reissued 64 shares at $90 per share.

On November 1, Sage reissued 41 shares at $85 per share.

Prepare Sage’s journal entries to record these transactions using the cost method.

Answer 1

Answer:

The Journal entries are as follows:

(i) On July 1, 2020

Treasury stock (105 × $87) A/c    Dr. $9,135

To cash                                                            $9,135

(To record treasury stock purchased)

(ii) On September 1,

Cash (64 × $90) A/c                               Dr. $5,760

To Treasury stock (64 × $87)                                           $5568        

To Paid in capital from sale of treasury stock (64 × $3)  $192

(To record sale of treasury stock)

(iii) On November 1,

Cash (41 × $85) A/c                                                           Dr. $3,485

Paid in capital from sale of treasury stock (41 × $2) A/c  Dr. $82

To Treasury stock                                                                               $3567

(To record sale of treasury stock)