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Biscayne Bay Water Inc. bottles and distributes spring water. On May 14 of the current year, Biscayne Bay Water Inc. reacquired 2,300 shares of its common stock at $49 per share. On September 6, Biscayne Bay Water Inc. sold 1,800 of the reacquired shares at $52 per share. The remaining 500 shares were sold at $46 per share on November 30. a. Journalize the transactions of May 14, September 6, and November 30. For a compound transaction, if an amount box does not require an entry, leave it blank.

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Answer:

May 14, 2020

Dr. Treasury Shares $112,700

Cr. Cash                    $112,700

September 6, 2020

Dr. Cash                                           $93,600

Cr. Treasury Shares                        $88,200

Cr. Paid-In-Capital Treasury Stock $5,400

November 30,

Dr. Cash                                           $23,000

Dr. Paid-In-Capital Treasury Stock $1,500

Cr. Treasury Shares                        $24,500

Explanation:

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

May 14

Treasury Shares = 2,300 x $49 = $112,700

Sale

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

September 6,

Proceeds = 1,800 x $52 = $93,600

Cost = 1,800 x $49 = $88,200

Paid-In-Capital Treasury Stock = $93,600 - $88,200 = $5,400

November 30,

Proceeds = 500 x $46 = $23,000

Cost = 500 x $49 = $24,500

Paid-In-Capital Treasury Stock = $24,500 - $23,000 = $1,500

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