Question

a corporation originally issued $5 par value stock for $6 per share. which of the following...

a corporation originally issued $5 par value stock for $6 per share. which of the following would be included in the entry to record the reacquisition of 200 shares per $8 per share

a. treasury stock would be debited for $1,600

b. treasury stock would be credited for $1,600

c. retained earnings would be debited for $1,000

d. treasury stock would be debited for $1,000

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Answer #1

Answer :

Option " a " Treasury Stock would be debited for $1600

Journal Entry :

General Journal Debit Credit
Treasury Stock $1600
             Cash $1600
( To record the purchase of Treasury stock )

Meaning of Treasury Stock : Treasury stock, also known as treasury shares or reacquired stock refers to previously outstanding stock that is bought back from stockholders by the issuing company. The result is that the total number of outstanding shares on the open market decreases. These shares are issued but no longer outstanding and are not included in the distribution of dividends or the calculation of earnings per share (EPS).

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