GE buys back 300,000 shares of its stock from investors at $45 a share. Two years later it reissues this sto ck for $65 a share. The stock reissue would be recorded as:

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The buyback of shares would be recorded as a debit to Treasury Stock for $13.5 million ($45 per share x 300,000 shares) and a credit to Cash for the same amount. Two years later, when the shares are reissued, the company receives $65 per share, resulting in a total of $19.5 million ($65 per share x 300,000 shares). To record this transaction, the company would debit Cash for $19.5 million, credit Treasury Stock for $13.5 million (the cost of the shares when they were bought back), and credit Additional Paid-in Capital for $6 million (the difference between the selling price of $65 and the purchase price of $45).

GE Buys Back 300,000 Shares of Its Stock from Investors