When treasury stock is sold for more than the par value and the cost of the...

When treasury stock is sold for more than the par value and the cost of the stock, what account(s) should be credited?

Select one:

a. Treasury Stock for the cost and additional paid-in capital for the excess of the sale price over the cost

b. Additional paid-in capital for the sale price

c. Treasury Stock for the sale price

d. Common Stock for the par value and retained earnings for the excess of the sale price over the par value

e. Common Stock for the sale price

Solutions

Expert Solution

Answer -

When treasury stock is sold for more than the par value and the cost of the stock then the treasury stock for the cost and additional paid-in capital for the excess of the sale price over the cost, should be credited.

The journal entry for the sale of treasury stock would be :-

General Journal

Debit ($)

Credit ($)

Cash

Treasury stock

Paid-in capital from treasury stock

XXX

Hence, Option - (a) is Correct.

Note - Option - (b), Option - (c), Option - (d) and Option - (e) are incorrect, because all these statement are False.

ekkarill92 answered 2 years ago

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