XV Corporation has 1,000 shares of treasury stock (common shares).It was originally issued at $15 per share and was reacquired at $10 per share.XV Corporation has decided to formally retire these shares; the current market price is $9.The single-transaction method is used.The entry to record the retirement of the shares should include the following:
A)Gain on retirement of common shares, $5,000.
B)Unusual gain, $5,000.
C)Retained earnings credit, $5,000.
D)Contributed capital from common share retirement, credit, $5,000.

Question

Quizplus · Accepted Answer

When shares are retired, the difference between the original issue price and the reacquisition price is credited to contributed capital from common share retirement. Here, the difference is $5,000 (1,000 shares x ($15 - $10)).

XV Corporation Has 1,000 Shares of Treasury Stock (Common Shares)