GE buys back 308,000 shares of its stock from investors at $53 a share. Two year

Question

GE buys back 308,000 shares of its stock from investors at $53 a share. Two years later it reissues this stock for $73 a share. The stock reissue would be recorded with a debit to Cash for: 1-a debit to Cash of $22.48 million, a credit to Treasury Stock of $16.32 million, and a credit to Additional Paid-in Capital of $6.16 million.

2- a debit to Cash of $22.48 million, a credit to Treasury Stock of $16.32 million, and a credit to Gain on Sale of Treasury Stock for $6.16 million.

3-a debit to Cash of $16.32 million, a debit to Additional Paid-in Capital of $6.16 million, a credit to Treasury Stock of $16.32 million, and a credit to Stockholders' Equity of $6.16 million.

4-a debit to Cash of $22.48 million and a credit to Treasury Stock of $22.48 million.

Explanation / Answer

Purchased price=308,000*53=$16,324,000 Treasury stock

Sale Price=308,000*73=$22,484,000 Cash

Additional paid in capital=$6,160,000

Answer is

1-a debit to Cash of $22.48 million, a credit to Treasury Stock of $16.32 million, and a credit to Additional Paid-in Capital of $6.16 million.

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