Question

acquired 20600 shares of its own common stock at $18 per share on February 5, 2020, and sold 10300 of these shares at $25 per share on August 9, 2021. The fair value of Crane's common stock was $22 per share at December 31, 2020, and $23 per share at December 31, 2021. The cost method is used to record treasury stock transactions. What account(s) should Crane credit in 2021 to record the sale of 10300 shares? Treasury Stock for $257500. Treasury Stock for $226600 and Retained Earnings for $30900. Treasury Stock for $185400 and Paid-in Capital from Treasury Stock for $72100. Treasury Stock for $185400 and Retained Earnings for $72100.

Answer 1

What account(s) should Crane credit in 2021 to record the sale of 10300 shares?

• Treasury Stock for $185400 and Paid-in Capital from Treasury Stock for $72100.

Step-by-step explanation:

The journal entry to record the sale of the treasury stocks would be:

February 5, 2020 sale of 10,300 stocks

Dr Cash 257,500

Dr Treasury stocks 185,400

Dr Additional paid in capital 72,100

Treasury stocks are a contra equity account that reduce stockholders' equity with a debit balance. When they are bought, the only accounts credited for the sale is cash. When they are resold, the only two accounts affected by the sale are treasury stocks (decrease) and additional paid in capital.