Buffalo Butter Co

Multiple Choice

Buffalo Butter Co.had 40,000 shares of $4 par value common stock outstanding on January 1.On January 20,the company purchased 4,000 of its stock for $16 per share.On July 3,the company reissued 2,000 of the shares at $20 per share.Buffalo Butter uses the cost method to account for its treasury stock. What journal entry will record the purchase of the stock on January 20?

A) Debit Treasury Stock for $16,000,debit Additional Paid-in Capital for $48,000,and credit Cash for $64,000.
B) Debit Treasury Stock and credit Cash for $64,000.
C) Debit Treasury Stock for $16,000,debit Common Stock for $48,000,and credit Cash for $64,000.
D) Debit Common Stock and credit Cash for $64,000.