Please refer to the following information for Petra Sales Company: If Petra Sales sells 10,000 shares of treasury stock at $14 per share, what journal entry will be made?

Question

Please refer to the following information for Petra Sales Company:  If Petra Sales sells 10,000 shares of treasury stock at $14 per share, what journal entry will be made?

Quizplus · Accepted Answer

When selling treasury stock, the amount received is credited to both Treasury stock and Paid-in capital accounts. This is because the stock was originally issued and sold by the company, so the proceeds from selling the treasury stock should be treated the same way. The entry would be:

Debit Cash $140,000
Credit Treasury stock $120,000
Credit Paid-in capital $20,000

Please Refer to the Following Information for Petra Sales Company