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Math  /  Numbers & Operations

QuestionCrane Corporation purchased from its stockholders 5,700 shares of its own previously issued stock for $279,300\$ 279,300. It later resold 1,600 shares for $52\$ 52 per share, then 1,600 more shares for $47\$ 47 per share, and finally 2,500 shares for $41\$ 41 per share.
Prepare journal entries for the purchase of the treasury stock and the three sales of treasury stock. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for th account titles and enter 0 for the amounts. List all debit entries before credit entries.)
Account Titles and Explanation Debit Credit □\square □\square □\square □\square □\square □\square (To record purchase from stockholders.) □\square □\square □\square □\square □\square □\square □\square □\square □\square (To record sales of shares at $52\$ 52 per share.) □\square □\square □\square □\square □\square □\square □\square □\square

Studdy Solution

STEP 1

1. Crane Corporation is using the cost method for accounting for treasury stock.
2. The purchase of treasury stock is recorded at cost.
3. Gains or losses on the sale of treasury stock are not recognized in the income statement but are recorded in additional paid-in capital or retained earnings.
4. The par value of the stock is not provided, so it is assumed that the transactions are recorded based on the cost method.

STEP 2

1. Record the purchase of treasury stock.
2. Record the sale of treasury stock at 52pershare.<br/>3.Recordthesaleoftreasurystockat52 per share.<br />3. Record the sale of treasury stock at 47 per share.
4. Record the sale of treasury stock at $41 per share.

STEP 3

Record the purchase of treasury stock.
- Debit: Treasury Stock 279,300−Credit:Cash279,300 - Credit: Cash 279,300
(To record purchase from stockholders.)

STEP 4

Calculate and record the sale of 1,600 shares at $52 per share.
- Sale proceeds: 1,600×52=$83,200 1,600 \times 52 = \$ 83,200 - Cost of shares sold: 279,3005,700×1,600=$78,400 \frac{279,300}{5,700} \times 1,600 = \$ 78,400 - Additional Paid-In Capital: 83,200−78,400=$4,800 83,200 - 78,400 = \$ 4,800
- Debit: Cash 83,200−Credit:TreasuryStock83,200 - Credit: Treasury Stock 78,400 - Credit: Additional Paid-In Capital $4,800
(To record sales of shares at $52 per share.)

STEP 5

Calculate and record the sale of 1,600 shares at $47 per share.
- Sale proceeds: 1,600×47=$75,200 1,600 \times 47 = \$ 75,200 - Cost of shares sold: 279,3005,700×1,600=$78,400 \frac{279,300}{5,700} \times 1,600 = \$ 78,400 - Reduction in Additional Paid-In Capital: 78,400−75,200=$3,200 78,400 - 75,200 = \$ 3,200
- Debit: Cash 75,200−Debit:AdditionalPaid−InCapital75,200 - Debit: Additional Paid-In Capital 3,200 - Credit: Treasury Stock $78,400
(To record sales of shares at $47 per share.)

STEP 6

Calculate and record the sale of 2,500 shares at $41 per share.
- Sale proceeds: 2,500×41=$102,500 2,500 \times 41 = \$ 102,500 - Cost of shares sold: 279,3005,700×2,500=$122,500 \frac{279,300}{5,700} \times 2,500 = \$ 122,500 - Reduction in Additional Paid-In Capital: 122,500−102,500=$20,000 122,500 - 102,500 = \$ 20,000
- Debit: Cash 102,500−Debit:AdditionalPaid−InCapital102,500 - Debit: Additional Paid-In Capital 20,000 - Credit: Treasury Stock $122,500
(To record sales of shares at $41 per share.)

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