Marina, Inc., acquires 1 million shares of its own $1 par value common stock at $70 per share. It later resells the 1 million shares of treasury stock for $75. We record the $5 difference per share as a:a. gain in the income statement, b. revenue in the income statement, c. credit to Additional Paid-in Capital, d. credit to Common Stock.

Question

Business

Bryson

17 January, 06:06

Marina, Inc., acquires 1 million shares of its own $1 par value common stock at $70 per share. It later resells the 1 million shares of treasury stock for $75. We record the $5 difference per share as a:a. gain in the income statement, b. revenue in the income statement, c. credit to Additional Paid-in Capital, d. credit to Common Stock.

+1

Answers (1)

Know the Answer?

Amira · Answer 1

c. credit to Additional Paid-in Capital

Explanation:

The journal entry to record the difference is shown below:

Cash A/c Dr $75 million

To Treasury stock A/c $70 million (1 million shares * $70 per share)

To Additional paid in capital - in excess of par $5 million

(Being the issuance of treasury stocks is reported and the amount remaining is credited to the additional paid-in capital account)