If a company resells treasury stock for less than it was acquired,how is the difference between the original purchase price and the resell price recorded? First,you would:

Question

Quizplus · Accepted Answer

When treasury stock is resold for less than its original purchase price, the difference between the original purchase price and the resell price is recorded as a debit to Paid-in capital-Treasury Stock account. This account is credited with the original cost of treasury shares purchase by the company. If the account has enough balance, it can be debited to cover the loss incurred on the resale of the shares. This approach results in a reduction of the amount of paid-in capital and does not affect retained earnings. Hence, option B is the correct choice.

If a Company Resells Treasury Stock for Less Than It