On May 3, Zirbal Corporation purchased 7,000 shares of its own stock for $84,000 cash. On November 4, Zirbal reissued 1,600 shares of this treasury stock for $20,800.
Prepare the May 3 and November 4 journal entries to record Zirbal's purchase and reissuance of treasury stock.
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May 3 Journal Entry:
Debit: Treasury Stock $84,000
Credit: Cash $84,000
Explanation: Zirbal Corporation purchased 7,000 shares of its own stock for $84,000 cash. This is recorded as a debit to Treasury Stock (an equity account) and a credit to Cash (an asset account).
November 4 Journal Entry:
Debit: Cash $20,800
Credit: Treasury Stock $20,800
Explanation: Zirbal Corporation reissued 1,600 shares of its treasury stock for $20,800. This is recorded as a debit to Cash (an asset account) and a credit to Treasury Stock (an equity account).
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