The stockholders' equity section of Twilight Time's balance sheet on January 1, 2016, appeared as follows: $\begin{array}{lr}
\text { Common stock, \$2 par, } 2,000 \text { shares issued and outstanding } & \$ 4,000 \
\text { Additional paid-in capital-Common } & 1,600 \
\text { Retained earnings } & 5,400 \
\quad \text { Total stockholders' equity } & \$ 11,000
\end{array}$ On March 1, 2016, Twilight reacquired 800 shares of common stock at $10 per share.Twilight sold 400 of the treasury shares on November 15 for $12 per share.The entry to record the sale on November 15 would show:

Question

Quizplus · Accepted Answer

The entry to record the sale of treasury shares would include a decrease in Treasury Stock for the cost of the shares when they were reacquired. Since 800 shares were initially bought back at $10 per share, the total cost was $8,000. Selling 400 of these shares means half of the treasury stock is being sold, but the decrease in Treasury Stock account would be based on the cost of these shares when reacquired, which is 400 shares * $10 = $4,000.

The Stockholders' Equity Section of Twilight Time's Balance Sheet on January