Long Co. issued 100,000 shares of $10 par common stock for $1,200,000. A year later Long acquired 12,000 shares of its own common stock at $15 per share. Three months later Long sold 6,000 of these shares at $19 per share. If the cost method is used to record treasury stock transactions, to record the sale of the 6,000 treasury shares, Long should credit

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According to the cost method, when treasury stock is sold, the cost of shares sold is debited to Treasury Stock account and the excess of the selling price over the cost is credited to Paid-in Capital from Treasury Stock. In this case, Long purchased 12,000 shares of its own common stock at $15 per share for a total cost of $180,000 (12,000 x $15). Therefore, the cost per share is $15. When Long sold 6,000 of these shares at $19 per share, the cost of shares sold is 6,000 x $15 = $90,000. The excess of the selling price over the cost is $24,000 (6,000 x $4). Therefore, Long should credit Treasury Stock for $90,000 and Paid-in Capital from Treasury Stock for $24,000.

Long Co Issued 100,000 Shares of $10 Par Common Stock for for $1,200,000