Refurbish,Inc.reissued 1,000 shares of its treasury stock for $10,000.Prior to the reissuance,the Treasury Stock balance was $12,000,which included the $8,000 cost of the 1,000 shares reissued.After recording this transaction:
A) Treasury Stock will equal $4,000.
B) Treasury Stock will equal $2,000.
C) Additional Paid-in Capital will be increased by $12,000.
D) Cash will be decreased by $10,000.

Question

Quizplus · Accepted Answer

After the reissuance, the Treasury Stock balance will be reduced by the amount received from the sale of the shares, which is $10,000. Therefore, the new Treasury Stock balance will be $2,000 ($12,000 - $10,000). The Additional Paid-in Capital account is not affected by the reissuance of treasury stock. Cash will be increased by $10,000 (not decreased) as a result of the sale.