Gupta Corp.purchased its own shares on January 1, 2017 for $20,000 and debited Treasury Shares for the purchase price.The shares were subsequently sold for $12,000.The $8,000 difference between the cost and sales price should be recorded as a debit to

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Quizplus · Accepted Answer

Treasury shares are recorded at cost when purchased and are removed from the number of shares outstanding. When treasury shares are sold, the difference between the cost and sales price is recorded as a debit to Contributed Surplus to the extent that previous net "gains" from sales or retirements of the same class of shares are included therein; otherwise, to retained earnings.