MC Qu. 82 At the end of the prior year, Atoka... At the end of the prior year,At

Question

MC Qu. 82 At the end of the prior year, Atoka... At the end of the prior year,Atoka Industries reported the following account balances Common Stock ($0.01 par value) Additional Paid-in Capital Retained Earnings Treasury Stock $2,000 1,000,000 1.400,000 780,000 The treasury stock arose from a purchase of 10,000 shares of common stock for $78 per share. If the 10,000 treasury shares are issued for $50 per share in the current year, what journal entry must be prepared to record the transaction? Debit Cash for $500,000, debit Other Losses for $280,000, and credit Treasury Stock for 780000 O Debit Cash for $500,000, credit Common Stock for $100, and credit Additional Paid-in Capital for $499,900 Debit Cash for $500,000, debit Additional Paid-in Capital for $280,000, and credit Treasury Stock for $780,000 Debit Cash and credit Treasury Stock for $500,000

Explanation / Answer

If the shares from treasury stock are reissued at a price that is lower than their cost, the difference is debited to additional paid-in capital. Journal entry to record reissue of Treasury shares Transaction General Journal Debit Credit 1 Cash $500,000.00 Additional Paid in Capital $280,000.00 Treasury Stock $780,000.00

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