CM Inc. purchased 1000 shares of their own stock on the open market. The stock h

Question

CM Inc. purchased 1000 shares of their own stock on the open market. The stock had a par value of $1 and was purchased at a price of $ 100 per share. Six months later, CM Inc. resold 500 of those shares for $ 90 each. What is the journal entry to record the sale of the 500 shares (assuming there is no balance in the Treasury Stock (T/S) Additional Paid in capital account at the time it was resold)?

a. Cash $45,000 Treasury stock $45,000 b. Cash $45,000 Treasury stock $1,000 T/S Additional paid in capital $44,000 c. Cash $45,000 Retained earnings $5,000 Treasury stock $50,000 d. Cash $45,000 Treasury stock $1,000 Retained earnings $44,000

Explanation / Answer

Answer is C

Dr. Cash A/c $45,000

Dr. Reained earnings $5,0000

Cr. Treasury stock a/c $50,000

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