"Gains" on sales of treasury stock (using the cost method) should be credited to
A) paid-in capital from treasury stock.
B) capital stock.
C) retained earnings.
D) other income.

Question

Quizplus · Accepted Answer

Under the cost method, gains on sales of treasury stock are credited to "paid-in capital from treasury stock." This is because the gains are considered to contribute to the equity of the company, but they are not realized gains like those that would be reported in the income statement under "other income." They do not affect the capital stock directly nor are they distributed as retained earnings.

"Gains" on Sales of Treasury Stock (Using the Cost Method)