When treasury stock is sold at a price below its cost,the entry to record the sale has the effect of reducing total stockholders' equity.

Question

Quizplus · Accepted Answer

Selling treasury stock below cost results in a loss, which decreases total stockholders' equity. The entry to record the sale will include a debit to Cash for the sale price, and a credit to Treasury Stock for cost, which will result in a reduction in total stockholders' equity due to the loss.

When Treasury Stock Is Sold at a Price Below Its