Question

On January 1, Vermont Corporation had 44,200 shares of $9 par value common stock issued and outstanding. All 44,200 shares had been issued in a prior period at $22 per share. On February 1, Vermont purchased 1,160 shares of treasury stock for $28 per share and later sold the treasury shares for $22 per share on March 1. The journal entry to record the purchase of the treasury shares on February 1 would include a debit to a loss account for $6,960. credit to Treasury Stock for $32,480. debit to Treasury Stock for $32,480. credit to a gain account for $6,960.

Answer 1

	Correct Option B i.e. credit to Treasury Stock for $32,480.
Reason:
Entry at the time of purchase of treasury stock
Date	Accounts Title and Explanation	Debit	Credit
Feb-01	Treasury Stock	32480
	Cash		32480	(1160*28)
	(To record purchase of treasury stock)
Mar-01	Cash	25520
	Paid in capital from treasury stock	6960
	Treasury Stock		32480
	(To record sale of treasury stock)