Johnston, Inc., engaged in the following transactions involving treasury stock. Feb. 10 Purchased for cash 17,000 shares of treasury stock at a price of $31 per share.
June 4 Reissued 6,000 shares of treasury stock at a price of $34 per share.
Dec. 22 Reissued 4,000 shares of treasury stock at a price of $22 per share.
a. Prepare general journal entries to record these transactions.

Answer and Explanation:

The journal entries are shown below

On Feb 10

Treasury stock Dr (17,000 shares × $31) $527,000

         To cash $527,000

(Being the treasury stock purchased for cash is recorded)

On June 4

Cash (6,000 shares × $34) $204,000

        To Treasury stock (6,000 shares × $31) $186,000

         To Additional paid in capital - Treasury stock (6,000 shares × $3) $18,000

(being the reissuance of the treasury stock is recorded)

On Dec 22

Cash (4,000 shares × $22) $88,000

Additional paid in capital - Treasury stock (4,000 shares × $9) $36,000

                To Treasury stock (4,000 shares × $31) $124,000

(being the reissuance of the treasury stock is recorded)