Gannon Company acquired 6,000 shares of its own common stock at $20 per share on
ID: 2436063 • Letter: G
Question
Gannon Company acquired 6,000 shares of its own common stock at $20 per share on February 5, 2010, and sold 3,000 of these shares at $27 per share on August 9, 2011. The market value of Gannon's common stock was $24 per share at December 31, 2010, and $25 per share at December 31, 2011. The cost method is used to record treasury stock transactions. What account(s) should Gannon credit in 2011 to record the sale of 3,000 shares?a. Treasury Stock for $81,000.
b. Treasury Stock for $60,000 and Paid-in Capital from Treasury Stock for $21,000.
c. Treasury Stock for $60,000 and Retained Earnings for $21,000.
d. Treasury Stock for $72,000 and Retained Earnings for $9,000.
Explanation / Answer
b. Treasury Stock for $60,000 and Paid-in Capital from Treasury Stock for $21,000. Feb 5, 2010 Treasury Stock Dr $120,000 Cash Cr $120,000 Repurchase 60,000 shares at $20 Aug 9, 2011 Cash (3,000 × $27) Dr $81,000 Treasury Stock (3,000 × $20) Cr 60,000 Additional paid-in-capital (treasury stock) Cr 21,000 Record sale of 3,000 shares of treasury stock at $27
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