A corporation has 40,000 shares of $5 par common stock outstanding. The corporation has acquired treasury stock for $8.00 per share. Which of the following would be included in the entry to record the reissue of 8,000 shares of the treasury stock for $10 per share?

Question

Quizplus · Accepted Answer

DWhen treasury stock is reissued above its cost, the excess is credited to Paid-in Capital from Treasury Stock Transactions (choice C). The cost of the treasury stock, which is $8.00 per share for 8,000 shares, totals $64,000 (not $80,000 as stated in choice D), but the concept of debiting Treasury Stock for the cost of the shares being reissued is correct. The error in my initial response was in the interpretation of choice D's dollar amount, which should have been understood as referring to the correct action (debiting Treasury Stock) but with an incorrect dollar figure provided in the choice. The correct dollar figure for the debit to Treasury Stock should be based on the cost of acquiring those shares, not the reissue price.

A Corporation Has 40,000 Shares of $5 Par Common Stock