On November 6,Coleman Corp.reacquired 1,000 shares of its $2 par value common stock for $27 each.On November 20,Coleman Corp.reissued 400 shares for $30 each.Which of the following is correct regarding the effect of the journal entry for the reissued shares?

Question

Quizplus · Accepted Answer

The reissued shares result in an increase in stockholders' equity as the company received $30 per share which is $3 more than the cost of reacquiring the shares at $27 per share. Therefore, the journal entry for the reissued shares will include a credit to Common Stock for $800 ($2 x 400) and a credit to Paid-in Capital in Excess of Par for $400 ($1 x 400). This will increase the Stockholders' Equity by $1,200.