Question

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?

Answer 1

null or zero. It has no impact on retained earnings.

Step-by-step 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.