Question

GE buys back 300,000 shares of its stock from investors at $45 a share. Two years later it reissues this stock for $65 a share. The stock reissue would be recorded with a debit to Cash for:

A) $19.5 million and a credit to Treasury Stock for $19.5 million.

B) $13.5 million, a debit to Additional Paid-in Capital for $6 million, a credit to Treasury Stock for $13.5 million, and a credit to Stockholders' Equity for $6 million.

C) $19.5 million, a credit to Treasury Stock for $13.5 million, and a credit to Additional Paid-in Capital for $6 million.

D) $19.5 million, a credit to Treasury Stock for $13.5 million, and a credit to Gain on Sale of Treasury Stock for $6 million.

Answer

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