B is corrent because when treasury stock is repurchased under the cost method, the entry to record the purchase is| Treasury stock | (cost) | | | | (cost) |
The entry to record the purchase of treasury stock under the par value method is| Treasury stock | (par) | | Additional paid-in capital | * | | Retained earnings | (plug) | | |
*Amount of excess over par when stock was originally issued. The treasury stock account reduces total stockholders’ equity, as do the debits to the other SE accounts. Therefore, stockholders’ equity is reduced by the same amount under both methods.A is incorrect. When treasury stock is repurchased under the cost method, the entry to record the purchase is| Treasury stock | (cost) | | | | (cost) |
The entry to record the purchase of treasury stock under the par value method is| Treasury stock | (par) | | Additional paid-in capital | * | | Retained earnings | (plug) | | |
*Amount of excess over par when stock was originally issued. The treasury stock account reduces total stockholders’ equity, as do the debits to the other SE accounts. Therefore, stockholders’ equity is reduced by the same amount under both methods.C is incorrect. When treasury stock is repurchased under the cost method, the entry to record the purchase is| Treasury stock | (cost) | | | | (cost) |
The entry to record the purchase of treasury stock under the par value method is| Treasury stock | (par) | | Additional paid-in capital | * | | Retained earnings | (plug) | | |
*Amount of excess over par when stock was originally issued. The treasury stock account reduces total stockholders’ equity, as do the debits to the other SE accounts. Therefore, stockholders’ equity is reduced by the same amount under both methods.D is incorrect. When treasury stock is repurchased under the cost method, the entry to record the purchase is| Treasury stock | (cost) | | | | (cost) |
The entry to record the purchase of treasury stock under the par value method is| Treasury stock | (par) | | Additional paid-in capital | * | | Retained earnings | (plug) | | |
*Amount of excess over par when stock was originally issued. The treasury stock account reduces total stockholders’ equity, as do the debits to the other SE accounts. Therefore, stockholders’ equity is reduced by the same amount under both methods. |
