DWWR Purchased Its Own Common Shares for $20,000 and Debited

DWWR purchased its own common shares for $20,000 and debited the treasury stock account for the purchase price.The shares were subsequently sold for $17,000.The $3,000 difference between the cost and sale price should be recorded as a reduction of:

A) The beginning balance of retained earnings.
B) Revenues on the income statement.
C) Contributed capital from treasury stock transactions without regard as to whether or not there have been previous net "gains" from sales or retirements of the same class of shares.
D) Contributed capital from treasury stock transactions to the extent of previous net "gains" from sales or retirements of the same class of shares; otherwise retained earnings should be reduced.

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free