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16 June, 19:23

Treasury stock was acquired for cash at a price in excess of its par value. The treasury stock was subsequently reissued for cash at a price in excess of its acquisition price. Assuming that the cost method of accounting for treasury stock transactions is used, what is the effect on retained earnings?

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  1. 16 June, 23:02
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    null or zero. It has no impact on retained earnings.

    Explanation:

    The retained earnings account is not used underthe cost method for treasyry stocks.

    the entries will be:

    treasury stock debit

    cash credit

    to record the purchase

    cash debit

    treasury stock credit

    additional paid. in TS credit

    The retained earnings is not involve in the transactions.
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