B is corrent. When treasury stock is acquired using the cost method, a stockholders’ equity account is debited for the cost of the treasury stock.| Treasury stock | xxx | | | Cash | | xxx |
When the treasury stock is subsequently sold for cash at more than its acquisition price, additional paid-in capital is credited for the gain.| Cash | xxx | | | Treasury stock | | xxx | | APIC treasury stock | | xxx |
Thus, the purchase would not affect additional paid-in capital but, the sale would increase it.A is incorrect. When treasury stock is acquired using the cost method, a stockholders’ equity account is debited for the cost of the treasury stock.| Treasury stock | xxx | | | Cash | | xxx |
When the treasury stock is subsequently sold for cash at more than its acquisition price, additional paid-in capital is credited for the gain.| Cash | xxx | | | Treasury stock | | xxx | | APIC treasury stock | | xxx |
Thus, the purchase would not affect additional paid-in capital but, the sale would increase it.C is incorrect. When treasury stock is acquired using the cost method, a stockholders’ equity account is debited for the cost of the treasury stock.| Treasury stock | xxx | | | Cash | | xxx |
When the treasury stock is subsequently sold for cash at more than its acquisition price, additional paid-in capital is credited for the gain.| Cash | xxx | | | Treasury stock | | xxx | | APIC treasury stock | | xxx |
Thus, the purchase would not affect additional paid-in capital but, the sale would increase it.D is incorrect. When treasury stock is acquired using the cost method, a stockholders’ equity account is debited for the cost of the treasury stock.| Treasury stock | xxx | | | Cash | | xxx |
When the treasury stock is subsequently sold for cash at more than its acquisition price, additional paid-in capital is credited for the gain.| Cash | xxx | | | Treasury stock | | xxx | | APIC treasury stock | | xxx |
Thus, the purchase would not affect additional paid-in capital but, the sale would increase it. |
