Question

Melrose Inc. buys back 314,000 shares of its stock from investors at $13.50 a share. Two years later, it reissues this stock for $13.00 a share. The stock reissue would be recorded with a debit to Cash for ___________

Answer 1

The stock reissue for Melrose Inc. will be recorded as a debit to Cash for the total amount received from the sale of treasury stock, which is $4,082,000.

Step-by-step explanation:

When Melrose Inc. reissues stock that was previously bought back from investors, the accounting transaction for the cash received would be recorded as a debit to Cash and a credit to Treasury Stock or Additional Paid-In Capital, depending on the previous transactions related to these shares.

In this specific case, the stock reissue would be recorded with a debit to Cash for $4,082,000 (which is calculated by multiplying the number of shares reissued, 314,000, by the reissue price per share, $13.00).