Use the information above to answer the following question.What journal entry will record the reissuance on July 3?
A) Debit Cash and credit Treasury Stock for $20,000
B) Debit Cash for $20,000, credit Treasury Stock for $16,000, and credit Additional Paid-in Capital for $4,000
C) Debit Cash for $20,000, credit Common Stock for $6,000, and credit Additional Paid-in Capital for $14,000
D) Debit Cash for $20,000, credit Common Stock for $16,000, and credit Gain on Reissuance of Stock for $4,000

Question

Quizplus · Accepted Answer

When treasury stock is reissued, the transaction must be recorded at the original cost of the shares ($16,000) and any excess over the original cost should be credited to the additional paid-in capital account ($4,000). Therefore, the journal entry would be to debit cash for $20,000, credit treasury stock for $16,000, and credit additional paid-in capital for $4,000.

Use the Information Above to Answer the Following Question