Question

Delta Corporation acquires 10,000 shares of its own $0.01 par value common stock at $10 per share. It later resells the 10,000 shares of treasury stock for $12. The entry to record this transaction will involve a:

debit to Cash for $100,000,credit to Additional Paid-in Capital for $20,000,credit to Common Stock for $100,credit to Treasury Stock for $120,000.

Answer 1

Additional Paid-in Capital for $20,000.

Step-by-step explanation:

The Journal is as follows:

Cash A/c Dr. $120,000

To treasury stock $100,000

To Additional paid in capital $20,000

(To record the treasury stock and Additional paid in capital)

Workings:

Cash = 10,000 shares × $12

= $120,000

Treasury stock = 10,000 shares × $10

= $100,000

Additional paid in capital = 10,000 shares × ($12 - $10)

= 10,000 shares × $2

= $20,000