The excess of sales price of treasury stock over its cost should be credited to
A) Treasury Stock Receivable
B) Premium on Capital Stock
C) Paid-In Capital from Sale of Treasury Stock
D) Income from Sale of Treasury Stock

Question

Quizplus · Accepted Answer

When a company resells its own treasury stock at a higher price than its cost, the excess is credited to the account Paid-In Capital from Sale of Treasury Stock. This account tracks the amount of capital that the company has received from the resale of its treasury stock. Choice A is not applicable since there is no treasury stock receivable account. Choice B is incorrect because this account records the excess amount paid by investors over par value of the common stock when it is issued, not the sale of treasury stock. Choice D is incorrect because income from the sale of treasury stock should be reported in the income statement, not the balance sheet.

The Excess of Sales Price of Treasury Stock Over Its