Anthem Inc.issues 200,000 shares of stock with a par value of $0.01 for $150 per share.Three years later,it repurchases these shares for $80 per share.Anthem records the repurchase in which of the following ways?
A)Debit Common Stock for $2,000,debit Additional Paid-in Capital for $29,998,000 and credit Cash for $30 million.
B)Debit Treasury Stock for $16 million and credit Cash for $16 million.
C)Debit Common Stock for $2,000,debit Additional Paid-in Capital for $15,998,000 and credit Cash for $16 million.
D)Debit Stockholders' Equity for $30 million,credit Additional Paid-in Capital for $14 million and credit Cash for $16 million.

Question

Quizplus · Accepted Answer

The repurchase of stock is recorded with a debit to Treasury Stock and a credit to Cash for $16,000,000 (or 200,000 shares × cost of $80 per share).