Sprinkle Inc. has outstanding 10,000 shares of $10 par value common stock. On July 1, 2020, Sprinkle reacquired 100 shares at $87 per share. On September 1, Sprinkle reissued 60 shares at $90 per share. On November 1, Sprinkle reissued 40 shares at $83 per share.
Prepare Sprinkle's journal entries to record these transactions using the cost method.

July 1, 2020

Dr. Treasury Shares $8,700

Cr. Cash                    $8,700

September 1, 2020

Dr. Cash                                           $5,400

Cr. Treasury Shares                        $5,220

Cr. Paid-In-Capital Treasury Stock $180

November 1, 2020

Dr. Cash                                           $3,320

Dr. Paid-In-Capital Treasury Stock $160

Cr. Treasury Shares                        $3,480

Explanation:

Treasury stock is the share of the company issued earlier and bought-back. It can be reissued and cancelled by the company.

Treasury Shares = 100 x $87 = $8,700

Issuance

All the difference in the issuance of treasury stock will be transferred to Paid-In-Capital Treasury Stock account.

September 1, 2020

Proceeds = 60 x $90 = $5,400

Cost = 60 x $87 = $5,220

Paid-In-Capital Treasury Stock = $5,400 - $5,220 = $180

November 1, 2020

Proceeds = 40 x $83 = $3,320

Cost = 40 x $87 = $3,480

Paid-In-Capital Treasury Stock = $5,400 - $5,220 = $180

engine assembler, survey reasearcher, auditor

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