Question

Day Corp. holds 10,000 shares of its $10 par value common stock as treasury stock reacquired in Year 2 for $120,000. On December 12, Year 4, Day reissued all 10,000 shares for $190,000. Under the cost method of accounting for treasury stock, the reissuance resulted in a credit to:___________

Answer 1

Answer:

Credit of Additional paid-in capital of $70,000

Explanation:

Under the cost method of accounting for treasury stock, the reissuance resulted in a credit to: Additional paid-in capital of $70,000

Treasury stock reacquired in Year 2 $120,000

Less Year 4, reissued $190,000

Balance $70,000

Hence the $70,000 will be the additional Paid-in capital because the Treasury stock was reacquired in Year 2 $120,000 in which later in Year 4, $190,000 was reissued .

Therefore Under the cost method of accounting for treasury stock, the reissuance resulted in a credit to: Additional paid-in capital of $70,000