Question

Carla Vista Enterprises buys back 600,000 shares of its stock from investors at $6.50 a share. Two years later, it reissues this stock for $6.00 a share. The stock reissue would be recorded with a debit to Cash for:

Answer 1

Answer:

The stock reissue would be recorded with a debit to Cash for $3,600,000, a debit to additional Paid in capital $300,000 and Credit to treasury stock $3,900,000

Explanation:

Description                          Debit$          Credit$

Cash                                  3,600,000

(600,000 * $6.00)

Additional Paid in capital  300,000

(600,000 x $0.50)

Treasury stock                                            3,900,000

(600,000 * 6.50)