Pretzel, Inc. paid $54,000 to buy back 9,000 shares of its $1 par value common stock. The stock was sold later at a selling price of $10 per share. The entry to record the sale would include a:

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When a company sells the treasury stock, it records the sale price as a credit to Cash, and any difference between the sale price and the cost of the treasury stock as a credit or debit to Paid-in Capital-Treasury Stock. In this case, Pretzel, Inc. bought back 9,000 shares of its common stock for $54,000, or $6 per share, so the cost of the 9,000 shares was $54,000. When it sells the 9,000 shares for $10 per share, it receives $90,000 ($10 per share × 9,000 shares), which results in a gain of $36,000 ($90,000 – $54,000). Since this gain is a result of selling treasury stock, it should be credited to Paid-in Capital-Treasury Stock. Therefore, the entry to record the sale would include a credit to Paid-in Capital-Treasury Stock for $36,000, and a credit to Cash for $90,000.