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A sale of treasury stock may result in a decrease in paid-in-capital. All decreases should be charged to the Paid-In-Capital from Sale of Treasury account.a. true b. false

Answer :

hyderali230

Answer:

b. false

Explanation:

A loss making treasury stock sale will decrease the paid-in-capital account by the amount of loss only.

In case of Loss

                           Dr.     Cr.

Cash                   xxx

Paid-In -Capital  xxx

Treasury                      xxx

In case of Profit

                           Dr.     Cr.

Cash                   xxx

Paid-In -Capital           xxx

Treasury                      xxx

As Paid-In-Capital account is part of equity account and it has credit balance. Hence Paid-In-Capital balance will only be reduced in case of loss making treasury shares sale.

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