On December 2,Coley Corp.acquired 1,000 shares of its $2 par value common stock for $27 each.On December 20,Coley Corp.reissued 400 shares for $15 each.Which of the following is correct regarding the journal entry for the reissued shares?

Question

Quizplus · Accepted Answer

When a company reissues its treasury stock, it reduces the treasury stock account and increases the amount of common stock outstanding. The journal entry for the reissued shares would be to debit Cash for the amount received ($15 x 400 = $6,000) and credit Treasury Stock for the cost of the shares being reissued ($27 x 400 = $10,800). Therefore, the correct answer is B. Choice A is incorrect because the cash received is only $6,000, not $15,000. Choice C is incorrect because there is no need to credit additional paid-in capital for reissued shares of common stock.