Question

Farm and Supply reissued 100 shares of treasury stock at $20 that had been reacquired for $15 per share. What is the entry?

A. Debit Cash $2,000; credit Treasury Stock—Common $1,500; credit Paid-In Capital from Treasury Stock $500
B. Debit Cash $2,000; credit Treasury Stock—Common $2,000
C. Debit Cash $1,500; credit Paid-In Capital from Treasury Stock $500, credit Treasury Stock—Common $2,000
D. None of the above

Answer 1

The correct answer is A. Debit cash $2000, credit Treasury stock common $1500, Credit paid in capital from Treasury stock $500.

To get the Debit cash we take the number of shares and multiply with treasury stock which is 100 × $20 = $2000.

To get the credit treasury stock we get the reused number of shares and multiply with the reacquired stock which is

100 × $15 = $1500.

To get the paid in capital from treasury we take the debit cash we take away the credit treasury which is,

$2000 - $1500 = $500.