On september 1, 2012, valdez company reacquired 16,000 shares of its $10 par value common stock for $15 per share. valdez uses the cost method to account for treasury stock. the journal entry to record the reacquisition of the stock should debit
a. treasury stock for $160,000.
b. common stock for $160,000.
c. common stock for $160,000 and paid-in capital in excess of par for $60,000.
d. treasury stock for $240,000

d. Treasury Stock for $240,000

Explanation:

The journal entry for re-acquisition of the stock under the cost method is shown below:

Treasury stock A/c Dr $240,000

    To Cash A/c                         $240,000

(Being the stock are reacquired for cash)

The $240,000 amount should be come from

= Number of shares × common stock per share

= 16,000 shares × $15

= $240,000

Since the stock is reacquired so we used the treasury stock account instead of the common stock account

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answer(d) encourage cooperation by improving the chances of mutually agreeable transactions;