Slater Roofing Company originally issued 6,000 shares of $10 par value common stock for $180,000...

Question:

Slater Roofing Company originally issued 6,000 shares of $10 par value common stock for $180,000 ($30 per share). Slater subsequently purchases 600 shares of treasury stock for $27 per share and resells the 600 shares of treasury stock for $29 per share. In the entry to record the sale of the treasury stock, there will be a:

A. credit to Paid-In Capital from Treasury Stock for $1,200.

B. credit to Treasury Stock for $6,000.

C. debit to Paid-In Capital in Excess of Par of $18,000.

D. credit to Common Stock for $16,200.

Journal Entry:

Journal entry is made by the company to record all the debits and credits going on into the business transactions. It also has additional comments which clarify the transactions more clearly.

Answer and Explanation:

Journal entry

Date account and explanation Debit credit
Cash ($600*$29) $17,400
Treasury Stock ($600*$27) $16,200
Paid in Capital from the sale of treasury stock $1,200
(To record sale of treasury stock)

So the answer is a) credit to Paid-In Capital from Treasury Stock for $1,200.


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Journal Entries and Trial Balance in Accounting

from Accounting 101: Financial Accounting

Chapter 3 / Lesson 10
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