On january 1, vermont corporation had 40,000 shares of $10 par value common stock issued and outstanding. all 40,000 shares has been issued in a prior period at $20.00 per share. on february 1, vermont purchased 3,750 shares of treasury stock for $24 per share and later sold the treasury shares for $21 per share on march 1. the journal entry to record the purchase of the treasury shares on february 1 would include a credit to treasury stock for $90,000 debit to treasury stock for $90,000 credit to a gain account for $112,500 debit to a loss account for $112,500

b. ​debit to Treasury Stock for $90,000

Explanation:

Vermont Corporation

​Debit to Treasury Stock for $90,000

($3,750 shares of treasury stock × $24 per share)

Therefore the journal entry to record the purchase of the treasury shares on February 1 would include​ Debit to Treasury Stock for $90,000 because On February 1, Vermont purchased 3,750 shares of treasury stock for $24 per share.

b. ​debit to Treasury Stock for $90,000

Explanation:

We multiply the shares purchased by their cost:

3,750 shares x $24 each =  90,000

The cash account will decrease by 90,000 therefore in the credit side to represent the amount iused to acquire these shares.

In the debit side we post the treasury stock account to represent the decrease in the outstanding common shares.

debit to treasury stock for $90,000

Explanation:

Vermont corporation

Purchased × Shares of treasury stock per share

Purchased 3,750

Shares of treasury stock for $24 per share

Hence:

Purchased 3,750 × shares of treasury stock for $24 per share

=$90,000

Therefore journal entry to record the purchase of the treasury shares on february 1 would include a debit to treasury stock for $90,000

Explanation:

The journal entry is shown below:

Treasury Stock A/c Dr $90,000

        To Cash A/c $90,000

(Being treasure stock is purchased for cash)

The computation is shown below:

= Treasury shares purchased × value per share

= 3,750 shares × $24

= $90,000

We simply debited the treasury stock account and credited the cash account so that the correct posting can be done

Journal entry to report the purchase of the treasury shares on February 1, would include a debit to treasury stock for $90,000.

Explanation:

The journal entry to record the purchase of treasury stock is as:

February 1  Treasury Stock A/cDr    $90,000

                              Cash A/cCr   $90,000

As the stock is coming into the business so any increase in asset is debited whereas it is purchased against cash so cash is decreasing and any decrease in asset is credited. Therefore, cash account is credited.

Working Note:

Amount = Shares × Rate per share

= 3,750 × $24

= $90,000

Note: The correct option is missing so I stated the correct answer in the answer part.

The journal entry, to record the sale of the treasury shares on February 1, would include:

a) debit to a loss account for $112,500

b) credit to Treasury Stock for $90,000

c) credit to a gains account for $112,500

d) debit to Treasury Stock for $90,000

Option D Debit to Treasury Stock for $90,000

Explanation:

The journal entry of repurchase of treasury stock is as under:

Dr Treasury Stock $90,000

Cr          Cash              $90,000

As the treasury stock has been purchased for cash, the cash has been decreased and the decrease in treasury stock is credit in nature. Hence the decrease in stock is shown as debit and decrease in cash is shown as credit.

The rate as which the stock is purchased is the price at which treasury stock will be debited = Treasury shares purchased × Fair Value per Share

= 3,750 shares × $24

= $90,000