Answer the following statements true (T) or false (F)
1. A sale of treasury stock at its cost increases assets and increases equity.
2. If treasury shares are sold for less than their cost, the difference is recorded as a loss.
3. The account Paid-In Capital from Treasury Stock Transactions has a credit balance of $2,000. The corporation resells 450 shares of its treasury stock. These shares were acquired for $10 per share and sold for $3 per share. The entry to record the sale of treasury stock includes a debit to Retained Earnings of $3,150.
4. When a corporation retires its shares of treasury stock, the stock certificates are canceled.
5. Retired shares of treasury stock may later be reissued.
1. TRUE
2. FALSE - Explanation: If treasury shares are sold for less than their cost, the difference is first debited to Paid-In Capital from Treasury Stock Transactions and then to Retained Earnings if the balance in Paid-In Capital from Treasury Stock Transactions is too small.
3. FALSE
4. TRUE
5. FALSE
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