Question

On December 2, Coley Corp. acquired 1.000 shares of its $2 par value common stock for $27 each. On December 20, Coley Corp. resold 400 shares for $15 each. Which of the following is correct regarding the journal entry for the resold shares?

a) Debit Cash $15.000.
b) Credit Treasury Stock $10,800.
c) Credit Treasury Stock $6,000.
d) Credit Additional Paid in Capital $5,200.

Answer 1

The correct journal entry for the resold shares is: Credit Treasury Stock $10,800. Therefore, the correct option is B.

Step-by-step explanation:

The correct journal entry for the resold shares is:

b) Credit Treasury Stock $10,800.

When shares of common stock are resold, the Treasury Stock account is credited to reflect the decrease in the number of shares held by the company. In this case, 400 shares were resold, so the credit to Treasury Stock should be $10,800 (400 shares x $27 per share).

Options a, c, and d are incorrect because they do not reflect the appropriate accounting treatment for the resold shares.