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22 June, 19:27

The journal entry to record the sale of treasury stock might include all of the following except for:

a. a credit to Paid-In Capital from Sale of Treasury Stock.

b. a debit to Paid-In Capital from Sale of Treasury Stock.

c. a credit to common stock.

d. a credit to Treasury Stock.

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Answers (1)
  1. 22 June, 21:48
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    b. a debit to Paid-In Capital from Sale of Treasury Stock.

    Explanation:

    Treasury stock is the stock of equity purchased by the company itself, from open market. Basically it has a debit balance. And it is shown as a negative value from common equity in the balance sheet.

    Now when there is sale of such treasury stock, this treasury stock will be credited, also in next entry common stock will be credited as it will increase automatically therefore in no circumstances Paid in capital will be debited from sale of treasury Stock.

    Final Answer

    b. a debit to Paid-In Capital from Sale of Treasury Stock.
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