46. CPA-05228 Released 2006 Page 13

Porter Co. began its business last year and issued 10,000 shares of common stock at $3 per share. The

par value of the stock is $1 per share. During January of the current year, Porter bought back 500 shares

at $6 per share, which were reported by Porter as treasury stock. The treasury stock shares were

reissued later in the current year at $10 per share. Porter used the cost method to account for its equity

transactions. What amount should Porter report as paid-in capital related to its treasury stock

transactions on its balance sheet for the current year?

a. $1,500

b. $2,000

c. $4,500

d. $20,000

Correct answer is B.  I know how to arrive at this answer. but does anyone know the correct Treasury stock Journal Entries?.