On December 2, Coley Corp. acquired 900 shares of its $3 par value common stock for $21 each.

On December 20, Coley Corp. resold 500 shares for $15 each. Which of the following is correct regarding the journal entry for the resold shares?

Debit Cash $13,500
Credit Treasury Stock $10,500
Credit Additional Paid–in Capital $6,000
Credit Treasury Stock $7,500

Solutions

Expert Solution

· When treasury stock is resold:
Cash is debited by amount at which these are reissued.
Treasury Stock is credited by the amount of cost of shares reissued.

· Cash to be debited = 500 shares x $ 15 = $ 7500

· Treasury Stock to be credited by = 500 shares x $ 21 = $ 10,500

· Correct Answer = Option #2
Credit Treasury Stock for $ 10,500

ekkarill92 answered 1 year ago

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