Gupta Corp

question 7

Multiple Choice

Gupta Corp. purchased its own shares on January 1, 2020 for $ 20,000 and debited Treasury Shares for the purchase price. The shares were subsequently sold for $ 12,000. The $ 8,000 difference between the cost and sales price should be recorded as a debit to

• A) Contributed Surplus to the extent that previous net "gains" from sales or retirements of the same class of shares are included therein; otherwise, to retained earnings.
• B) Contributed Surplus regardless of whether there have been previous net "gains" from sales or retirements of the same class of shares included therein.
• C) Retained Earnings.
• D) Loss from Sale of Treasury Shares.

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