Lenworth Company purchased 1,000 shares of its own $5 par value common stock when the market price of the stock was $18 per share. Select the journal entry that correctly records Lenworth's purchase of treasury stock.

Question

Quizplus · Accepted Answer

Treasury stock is recorded at cost. The entry to record the repurchase is recorded as a debit (increase) to treasury stock and a credit (decrease) to cash for $18,000 (1,000 shares x $18 per share purchase price).

Lenworth Company Purchased 1,000 Shares of Its Own $5 Par