Question

On December 2, Coley Corp. reacquired 1,400 shares of its $4 par value common stock for $20 each. On December 20, Coley Corp. reissued 1,000 shares for $11 each. Which of the following is correct regarding the journal entry for the reissued shares?
Credit Additional Paid-in Capital $7,000

Credit Treasury Stock $20,000

Debit Cash $15,400

Credit Treasury Stock $11,000

Answer 1

Answer:

Credit Treasury Stock $20,000

Explanation:

Treasury shares are those share which is bought back by the company. Treasury stock account is the contra equity account which is deducted from the equity value.

Journal Entry for Re-issuance of treasury stock

Dr.     Cash ( 1,000 x $11 )                    $11,000

Dr.     Add-in capital Treasury stock   $9,000

Cr.    Treasury Stock ( 1,000 x $20 )   $20,000

Due to debit nature of treasury stock it is credit to reduce the balance of treasury stock.