Slaton Company originally issued 3,000 shares of $10 par value common stock for $90,000 ($30 per share). Slaton subsequently purchases 300 shares of treasury stock for $27 per share and resells the 300 shares of treasury stock for $29 per share. In the entry to record the sale of the treasury stock, there will be a

Question

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When treasury stock is sold for more than its cost, the difference is credited to Paid-In Capital from Treasury Stock. Therefore, the entry to record the sale of the treasury stock would include a debit to Cash for $8,700 ($29 x 300), a credit to Treasury Stock for $8,100 ($27 x 300), and a credit to Paid-In Capital from Treasury Stock for $600 ($29 - $27 x 300). Choice A is incorrect because there is no change in the number of shares of Common Stock outstanding. Choice B is incorrect because the treasury stock was sold, not retired. Choice C is incorrect because the stock was sold at a premium, not below par value.

Slaton Company Originally Issued 3,000 Shares of $10 Par Value