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(34 of 50) A company sold 200 shares of $2 par treasury stock for $5 per...

(34 of 50)

A company sold 200 shares of $2 par treasury stock for $5 per share. The treasury stock was originally purchased for $4 per share. The journal entry for this transaction includes:

dr. Cash 1,000, dr. APIC (additional paid-in capital) 600, cr. Treasury Stock 1,600

dr. Cash 1,000, cr. APIC (additional paid-in capital) 600, cr. Treasury Stock 400

dr. Cash 1,000, dr. APIC (additional paid-in capital) 200, cr. Treasury Stock 1,200

dr. Cash 1,000, cr. APIC (additional paid-in capital) 200, cr. Treasury Stock 800

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Answer #1

The correct answer is

Dr. Cash , Cr. APIC (additional paid in capital) 200, cr. Treasury stock 800

Explanation

Since the compay has sold its treasury stock for 5 each so it will receive cash of $ 1000 (5*200) and is has been sold above $ 1 above its repurchase cost so additional paid in capital will be credited with $ 200 (200*1) and Treasury stock will be credited with 800 (200*4).

So the correct answer is

Dr. Cash , Cr. APIC (additional paid in capital) 200, cr. Treasury stock 800

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