A company purchases 300 shares of its $50 par value common stock at $55 per share.It then reissues 50 shares at $57 per share.The entry upon reissue of the stock would be:

Question

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When a company reissues treasury stock, the entry should reflect the cash received and the separate accounts affected by the stock transaction.

In this case, the company purchased 300 shares of its $50 par value common stock for $55 per share, which means it spent a total of $16,500 to acquire these shares:

300 shares x $55 per share = $16,500

Then, the company reissued 50 of those shares at $57 per share, which means it received a total of $2,850 from the sale:

50 shares x $57 per share = $2,850

To record this transaction, the entry should be:

Debit: Cash $2,850 (to record the cash received from the sale of treasury stock)
Debit: Paid-in Capital, Treasury Stock $100 (to record the excess of the sale price over the cost of the treasury stock)
Credit: Treasury Stock - Common $2,750 (to remove the cost of the 50 shares sold from the treasury stock account)

A Company Purchases 300 Shares of Its $50 Par Value