AMD buys back 300,000 shares of its stock from investors at $6.50 a share.Two years later,it reissues this stock for $6.00 a share.The stock reissue would be recorded as:

Question

Quizplus · Accepted Answer

The reissue of stock at a lower price than the repurchase price results in a debit to Cash for the reissue amount ($6.00 x 300,000 = $1.8 million), a debit to Additional Paid-in Capital for the loss ($0.50 x 300,000 = $150,000), and a credit to Treasury Stock for the original repurchase amount ($6.50 x 300,000 = $1.95 million).

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