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California Surf Clothing Company issues 1,000 shares of $1 par value common stock at $18 per share. Later in the year, the company decides to Purchase 100 shares at a cost of $21 per share. Record the purchase of treasury stock. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

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Answer and Explanation:

The Journal entry is shown below:-

Treasury stock Dr, $2,100

(100 × $21)

     To Cash $2,100

(Being the purchase of treasury stock is recorded)

Therefore for recording the the purchase of treasury stock we simply debited the treasury stock as it decrease the equity and we credited the cash as it is also decreasing.

Tundexi

The journal entry will include a debit of $2,100 to Treasury stock and Credit of $2,100 to cash.

Given Information

The company purchase 100 shares at a cost of $21 per share.

Treasury Stock = Shares purchased * Cost per share

Treasury Stock = 100 Shares * $21.00 per share

Treasury Stock = $2,100

The Journal entry will include:

Date  Particulars               Debit      Credit

         Treasury Stock        $2,100        

               Cash                                   $2,100

Therefore, the journal entry will include a debit of $2,100 to Treasury stock and Credit of $2,100 to cash.

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