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On December 2, Coley Corp. acquired 1,800 shares of its $4 par value common stock for $23 each. On December 20, Coley Corp. resold 1,400 shares for $13 each. Which of the following is correct regarding the journal entry for the resold shares?

a. Credit Additional Paid-in Capital $7,000
b. Credit Treasury Stock $20,000
c. Debit Cash $15,400
d. Credit Treasury Stock $11,000
e. None of these

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Tundexi

Answer:

b. Credit Treasury Stock $20,000

Explanation:

                                   General Journal

            For the reacquisition of shares of common stock

Date           Account Titles and Explanation      Debit        Credit

Dec 2         Treasury stock                                 $28,000

                   Cash (1,400 shares * $20 each)                    $28,000              (To record the repurchase of shares of common shares

                                     General Journal

                  For the reissue of shares treasury stock

Date          Account Titles and Explanation     Debit      Credit

Dec 20    Cash (1,000 shares * $11 each)          $11,000

                Paid-in-capital in excess of par         $9,000

                - Treasure stock    

                Treasury stock                                                 $20,000

                (1,000 shares * $20 per share)

                (To record the reissue of treasury stock)

Conclusion: The journal entry to record the reissue of treasury stock is Credit Treasury Stock $20,000.

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