The account Paid-In Capital from Treasury Stock Transactions has a credit balance of $2,000. The corporation resells 450 shares of its treasury stock. These shares were acquired for $10 per share and sold for $3 per share. The entry to record the sale of treasury stock includes a debit to Retained Earnings of $3,150.

a. true

b. false

Question

Business

Villa

9 May, 04:19

The account Paid-In Capital from Treasury Stock Transactions has a credit balance of $2,000. The corporation resells 450 shares of its treasury stock. These shares were acquired for $10 per share and sold for $3 per share. The entry to record the sale of treasury stock includes a debit to Retained Earnings of $3,150.

a. true

b. false

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Answers (1)

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Aditya Davies · Answer 1

b. false

Explanation:

The journal entry is shown below:

Cash A/c Dr $1,350 (450 shares * $3)

Paid in capital - Treasury stock $2,000

Retained Earnings A/c Dr $1,150

To Treasury Stock A/c $4,500 (450 shares * $10)

(Being treasury stock is sold at lower price and the remaining amount would be debited to the retained earning account)

Hence, the given statement is false