If treasury stock is sold at a price greater than its reacquisition costs, the difference is:
A) debited to Paid-in Capital from Treasury Stock.
B) credited to Paid-in Capital from Treasury Stock.
C) debited to Retained Earnings.
D) credited to Retained Earnings.

Question

Quizplus · Accepted Answer

When treasury stock is sold at a price greater than its reacquisition costs, the difference (gain) is credited to Paid-in Capital from Treasury Stock. This account represents the amount of capital originally received by the company when the treasury stock was issued, and the gain is an indication that the company is receiving more cash than it originally received when it sold the shares as treasury stock. Neither Retained Earnings nor a debit entry would be affected by the sale of treasury stock at a gain.

If Treasury Stock Is Sold at a Price Greater Than