If treasury stock is sold for less than its cost, and there were no previous treasury stock sales, the difference between the sales price and cost is debited to

Question

Quizplus · Accepted Answer

The difference between the sale price and cost of treasury stock is considered a loss and therefore is debited to Retained Earnings. This is due to the fact that Retained Earnings represents the accumulated profits of the company that have not been distributed to shareholders. By debiting Retained Earnings, the company is recognizing a decrease in its accumulated profits as a result of the sale of treasury stock at a loss.

If Treasury Stock Is Sold for Less Than Its Cost