Question

The account​ Paid-In Capital from Treasury Stock Transactions has a credit balance of​ $2,000. The corporation resells 450 shares of its treasury stock. These shares were acquired for​ $10 per share and sold for​ $3 per share. The entry to record the sale of treasury stock includes a debit to Retained Earnings of​ $3,150.

a. true
b. false

Answer 1

Answer:

b. false

Explanation:

The journal entry is shown below:

Cash A/c Dr $1,350               (450 shares × $3)

Paid in capital - Treasury stock $2,000

Retained Earnings A/c Dr $1,150

              To Treasury Stock A/c $4,500            (450 shares × $10)

(Being treasury stock is sold at lower price and the remaining amount would be debited to the retained earning account)

Hence, the given statement is false