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Unformatted text preview: When treasury stock is sold at a price higher than the cost price, the difference goes to paid in capital - treasury stock. The journal entry is Cash (2,000X43) Dr 86,000 Treasury Stock (2,000X40) Cr 80,000 Paid in Capital-Treasury Stock Cr 6,000 (c) Sold 3,000 shares of the stock reacquired under part (a) at $39 cash per share. When treasury stock is sold at a price less than the cost price, the difference is first debited to paid in capital-treasury stock. If the balance in this account is not sufficient, the balance amount remaining is debited to retained earnings. In this case the difference is (40-39)X3,000=$3,000 and there is a balance of $6,000 on paid-in capital-treasury stock and so no debit to retained earnings. The journal entry is Cash Dr (3,000X39) 117,000 Paid in Capital - Treasury Stock Dr 3,000 Treasury Stock (3,000X40) Cr 120,000...
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- Spring '09