Prior to September 30, a company has never had any treasury stock transactions. A company repurchased 1,000 shares of its $2 par common stock on September 30 for $20 per share. On October 2, it reissued 400 of these shares at $21 per share. On October 12, it reissued the remaining 600 shares at $19 per share. The journal entry to record the purchase of the shares on September 30 would be:
A. Debit Common Stock, $20,000; Credit Cash, $20,000.
B. Debit Cash, $20,000; Credit Treasury Stock, $20,000.
C. Debit Cash, $20,000; Credit Common Stock, $2,000, Credit Paid-in Capital in Excess of Par Value, Common Stock, $18,000.
D. Debit Treasury Stock, $20,000; Credit Cash, $20,000.
E. Debit Cash, $8,400, Credit Treasury Stock, $8,000, Credit Paid-in Capital in Excess of Par Value, Common Stock, $400.
Answer: D
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