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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?

Respuesta :

TomShelby

Answer:

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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