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26 February, 04:32

Marina, Inc., acquires 1 million shares of its own $1 par value common stock at $70 per share. It later resells the 1 million shares of treasury stock for $75. We record the $5 difference per share as a:a. gain in the income statement, b. revenue in the income statement, c. credit to Additional Paid-in Capital, d. credit to Common Stock.

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  1. 26 February, 07:13
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    c. credit to Additional Paid-in Capital

    Explanation:

    The journal entry to record the difference is shown below:

    Cash A/c Dr $75 million

    To Treasury stock A/c $70 million (1 million shares * $70 per share)

    To Additional paid in capital - in excess of par $5 million

    (Being the issuance of treasury stocks is reported and the amount remaining is credited to the additional paid-in capital account)
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