When treasury stock is purchased for more than the par value of the stock and the cost method is used to account for treasury stock, what account(s) should be debited?
A) Treasury stock for the par value and paid-in capital in excess of par for the excess of the purchase price over the par value.
B) Paid-in capital in excess of par for the purchase price.
C) Treasury stock for the purchase price.
D) Treasury stock for the par value and retained earnings for the excess of the purchase price over the par value.

Question

Quizplus · Accepted Answer

Under the cost method of accounting for treasury stock, the treasury stock account is debited for the entire purchase price of the shares, regardless of their par value.

When Treasury Stock Is Purchased for More Than the Par