During the year, the following selected transactions affecting stockholders' equity occurred for Navajo Corporation: a. Feb. 1 Repurchased 220 shares of the company's own common stock at $22 cash per share.
b. Jul. 15 Sold 120 of the shares purchased on February 1 for $23 cash per share.
c. Sept. 1 Sold 90 of the shares purchased on February 1 for $21 cash per share.

Required:
Prepare the journal entry required for each of the above transactions.

Answer and Explanation:

The journal entries are shown below:

a. Treasury Stock Dr $4,840 (220 shares × $22)

    To Cash $4,840

(Being repurchase stock for cash is recorded)

b Cash $2,760  (120 shares × $23)

      To Treasury Stock$2,640  (120 shares × $22)

       To Additional Paid in capital  $120

(Being the sale of the shares are recorded)

c   Cash $1,890 (90 shares × $21)

    Additional Paid in capital  $90

         To Treasury Stock  $1,980 (90 shares  × $22)

(Being the sale of the shares are recorded)