Olympus Co. issued 100,000 shares of $10 par common stock for $1,200,000. A year later Olympus acquired 16,000 shares of its own common stock at $15 per share. Three months later Olympus sold 8,000 of these shares at $19 per share. If the cost method is used to record treasury stock transactions, to record the sale of the 8,000 treasury shares, Olympus should credit
Question 4 options:
Treasury Stock for $120,000 and Paid-in Capital in Excess of Par for $32,000.
Treasury Stock for $80,000 and Paid-in Capital from Treasury Stock for $72,000.
Treasury Stock for $152,000.
Treasury Stock for $120,000 and Paid-in Capital from Treasury Stock for $32,000.
Journal entry to record at the time of sale using Cost method
|No.||Account titles and explanation||Debit||Credit|
|Treasury stock (8000*$15)||$120000|
|Paid-in Capital from Treasury Stock (152000-120000)||$32000|
|(To record treasury stock sold)|
Olympus should credit Treasury stock for $120000 and Paid-in Capital from Treasury Stock for $32000
So, the answer is option D) Treasury Stock for $120000 and Paid-in Capital from Treasury Stock for $32000
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