Farm and Supply reissued 120 shares of treasury stock at $24 that had been reacquired for $11 per share. What is the entry?

A) Debit Cash $2,880; Credit Treasury Stock-Common $1,320, Credit Paid-In Capital from Treasury Stock $1,560
B) Debit Cash $2,880; Credit Treasury Stock-Common $2,880
C) Debit Cash $1,320; Debit Paid-In Capital from Treasury Stock $1,560, Credit Treasury Stock-Common $2,880
D) None of these answers is correct.

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Alyssa Eaton · Accepted Answer

Final Answer : A, Explanation :  The correct entry is to debit Cash for the total amount received from the reissue ($24 x 120 shares = $2,880), credit Treasury Stock for the cost of the shares when they were reacquired ($11 x 120 shares = $1,320), and credit Paid-In Capital from Treasury Stock for the difference ($2,880 - $1,320 = $1,560). This reflects the inflow of cash, the reduction of treasury stock at cost, and the recognition of the excess received over cost as additional paid-in capital.

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