Question

A company resells 10,000 shares of treasury stock for $22 per share. The stock was purchased in a previous year for $18 per share. By how much would net income be affected by the sale of this treasury stock?

Answer 1

Answer:

$0, income statement s not affected.

Explanation:

The purchase and resale of treasury stock does not affect the income statement. When a company's treasury stock is resold, additional paid-in capital increases (if the stock were sold at a price above cost) or decreases (if the stock were sold at a price below cost).