During the year, the following selected transactions affecting stockholders' equity occurred for Navajo Corporation: a. Feb. 1 Repurchased 200 shares of the company's own common stock at $28 cash per share.
b. Jul. 15 Sold 110 of the shares purchased on February 1 for $29 cash per share.
c. Sept. 1 Sold 80 of the shares purchased on February 1 for $27 cash per share.

Required: 1. Prepare the journal entry required for each of the above transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Please refer to Explanation

Explanation:

a.

February 1

DR Treasury Stock $5,600

CR Cash $5,600

(To record repurchasing of Company Shares)

Workings.

Treasury Stock = 200 * 28

= $5,600

b.

July 15

DR Cash $3,190

CR Treasury Stock $3,080

CR Additional Paid-in Capital $110

(To record sale of Treasury Stock)

Workings

Cash

= 110 shares * $29

= $3,190

Treasury Stock

= 110 shares * $28 (purchase price)

= $3,080

c.

Sept 1

DR Cash $2,160

DR Additional Paid-in Capital $80

CR Treasury Stock $2,240

(To record sale of Treasury Stock)

Workings

Because resale price was lower than repurchase price, Additional Paid-in Capital will have to be debited to reflect the loss.

Treasury Stock

= 80 shares * $28 (purchase price)

= $2,240

Cash

= $27 * 80

= $2,160

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