A company purchases 300 shares of its 25 par value stock at

A company purchases 300 shares of its $25 par value stock at $35 per share. It then reissues 100 shares at $40 per share. The entry upon reissue of the stock would include a credit to A) Paid in Capital, Treasury Stock for $500 B) Treasury stock for $500 C)Cash for $500 D) Retained Earningsfor $500

Solution

Answer

Accounts title

Debit

Credit

Working

Cash

$                               4,000.00

[100 shares x $ 40 per share received]

Treasury Stock

$                 3,500.00

[100 shares x $ 35 per share - COST]

Paid in Capital - Treasury Stock

$                 500.00

[100 shares x $ 5 per share] ($ 40 - $ 35]

(stock re issued)

Accounts title	Debit	Credit	Working
Cash	$                               4,000.00		[100 shares x $ 40 per share received]
Treasury Stock		$                 3,500.00	[100 shares x $ 35 per share - COST]
Paid in Capital - Treasury Stock		$                 500.00	[100 shares x $ 5 per share] ($ 40 - $ 35]
(stock re issued)