If the entry to record the retirement of treasury stock contains a credit to a Paid-in Capital, Retirement of Stock account, it is apparent that the
A) cost of the treasury shares was less than par value.
B) cost of the treasury shares was greater than the original issuance price of the shares.
C) cost of the treasury shares was less than the original issuance price of the shares.
D) original issuance price of the shares was less than par value.

Question

Quizplus · Accepted Answer

If the retirement of treasury stock results in a credit to a Paid-in Capital, Retirement of Stock account, it means that the amount paid to acquire the shares was less than the amount that was originally received when the shares were issued. This can happen if the company repurchased its shares in the open market at a price lower than the original issuance price. Therefore, the cost of the treasury shares was less than the original issuance price of the shares.

If the Entry to Record the Retirement of Treasury Stock