Four thousand treasury shares of Meyer, Inc., previously acquired at $12 per share, are sold at $18 per share. The entry to record this transaction will include a

Question

Quizplus · Accepted Answer

When treasury shares are sold, the difference between the cost of the shares and the selling price is recorded as a gain or loss in Share Premium-Treasury. In this case, the gain is $6 per share ($18 selling price - $12 cost per share = $6 gain per share). Therefore, the entry to record the transaction would include a debit to Treasury Shares for the cost of the shares sold ($12 per share x 4,000 shares = $48,000) and a credit to Share Premium-Treasury for the gain on the sale ($6 gain per share x 4,000 shares = $24,000). The other answer choices are incorrect because they do not reflect the proper accounting treatment for the sale of treasury shares.

Four Thousand Treasury Shares of Meyer, Inc