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 reissuance on July 3?

A) Debit Cash and credit Treasury Stock for $40,000
B) Debit Cash for $40,000,credit Treasury Stock for $32,000,and credit Additional Paid-in Capital for $8,000
C) Debit Cash for $40,000,credit Common Stock for $12,000,and credit Additional Paid-in Capital for $28,000
D) Debit Cash for $40,000,credit Common Stock for $32,000,and credit Gain on Reissuance of Stock for $8,000