Marshall Company bought 10,000 of its own shares for $12 per share. The shares were held as treasury stock. This was the only time Marshall had ever purchased treasury stock.
1. Marshall sold 5,000 of the shares for $13 per share. Prepare the journal entry.
2. Marshall sold the remaining 5,000 shares later for $11 per share. Prepare the journal entry.
3. Repeat requirement 2, assuming the shares were sold for $9 instead of $11 per share.
4. Did you record gains or losses in requirements 1, 2, and 3? Explain.