Question

A company purchased a 100 shares of its common stock at $54 per share it then sells 25 of the Treasury shares at 68 per share the entry to sell the Treasury stock includes a

Answer 1

Date	Account titles	Debit ($)	Credit ($)
	Cash	1700
	Treasury stock		1350
	Paid in capital from Treasury stock transactions		350
	(To record sale of treasury stock more than its cost)

Explanation:

1. As cash is received from sale of treasury stock , asset account (cash) has increased. So cash account is debited by $1700 [ 25 x $68 ]. 2. As treasury stock is sold , the stockholders equity value will be increased. So treasury stock account is credited by $1350 [ 25 x $54 ] 3. Treasury stock is sold more than its cost .It is not gain. This reduces stockholders equity value and must be credited to paid in capital from treasury stock transactions.[ $1700-$1350 = $350 ]