Question

Long Co. issued 100,000 shares of $10 par common stock for $1,200,000. A year later Long acquired 16,000 shares of its own common stock at $15 per share. Three months later Long sold 8,000 of these shares at $19 per share. If the cost method is used to record treasury stock transactions, to record the sale of the 8,000 treasury shares, Long should credit

a) treasury stock $152,000

b) Treasury stock for $80,000, and paid-in capital from treasury stock for $72,000

c) Treasury stock for $120,000, and paid-in capital from treasury stock for $32,000

d) Treasury stock for $120,000, and paid-in capital from excess of par for $32,000

Answer 1

For sale of treasury stock, following journal entry would be made:

	Cash	152,000
	Treasury stock		120,000
	Paid-in capital from treasury stock		32,000

Hence, correct option is (c)

Kindly comment if you need further assistance. Thanks