GE buys back 305,000 shares of its stock from investors at $50 a share. Two year

Question

GE buys back 305,000 shares of its stock from investors at $50 a share. Two years later it reissues this stock for $70 a share. The stock reissue would be recorded with a debit to Cash for:

-a debit to Cash of $21.35 million and a credit to Treasury Stock of $21.35 million.

-a debit to Cash of $21.35 million, a credit to Treasury Stock of $15.25 million, and a credit to Gain on Sale of Treasury Stock for $6.10 million.

-a debit to Cash of $21.35 million, a credit to Treasury Stock of $15.25 million, and a credit to Additional Paid-in Capital of $6.10 million.

-a debit to Cash of $15.25 million, a debit to Additional Paid-in Capital of $6.10 million, a credit to Treasury Stock of $15.25 million, and a credit to Stockholders' Equity of $6.10 million.

Explanation / Answer

Journal for reissue:

Cash a/c....Dr$21.35 million(305000*70)

To treasury stock $15.25million(305000*50)

To Additional Paid-in Capital $6.1million

Hence the correct option is C.

Related Questions

Navigate

• Browse (All)
• Browse G
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.