Question

Sprinkle Inc. has outstanding 10,000 shares of \(10 par value common stock. On July 1, 2017, Sprinkle reacquired 100 shares at \)87 per share. On September 1, Sprinkle reissued 60 shares at \(90 per share. On November 1, Sprinkle reissued 40 shares at \)83 per share. Prepare Sprinkle’s journal entries to record these transactions using the cost method.

Short answer

In Sprinkle Inc.’s book, the treasury stock should be credited with $3,480.

Step-by-step solution

Meaning of Per Share Price

The term price per share refers to the value of a single share asked by a company to sell shares to its potential investor to collect finance.

Preparing Sprinkle’s journal entries using the cost method

Date	Particular	Folio	Debit USD $	Credit USD $
01-07-2017	Treasury Stock (100$87) A/c Dr.		8,700
	To Cash A/c Cr.			8,700
	(being treasury stock issue)
01-09-2017	Cash A/c (60$90) Dr.		5,400
	To Treasury Stock (60$87) A/c Cr.			5,220
	To paid-in capital from Cr. Treasury Stock A/c			180
	(being treasury stock credited)
01-11-2017	Cash A/c (40$83) Dr.		3,320
	Paid-in capital from Dr. Treasury Stock A/c		160
	To Treasury Stocks (40$87) Cr.			3,480
	(being treasury stock transferred)