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Vailes Company reissued 200 shares of its treasury stock. The treasury stock originally cost $25 per share and was reissued for $35 per share. Which of the following accurately reflects how the reissue of the treasury stock would affect Vailes's financial statements?

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jafransp

Answer:

Asset = Liabilities + Equity

7000 = N/A + (Paid in treasury stock)

7000 = N/A + 2000 - (-5000)

Explanation:

Cash                                                        debit            7000

Paid in the capital - Treasury Stock      credit                           2000

Treasury Stock                                       credit                          5000

Treasury stock is to buy back stock; therefore, it can be sold at a lower price.

Note: Cash balance = $35*200 shares = $7000

Paid in the capital - Treasury Stock = ($35 - $25)*200 shares = $2000

Therefore, treasury stock $(7000 - 2000) = $5000

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