A method for ultrasonic synthetic aperture imaging using finite-sized transducers is introduced that is based on a virtual source (VS) concept. In this setup, a focused transducer creates a VS element at its focal point that facilitates the use of synthetic aperture focusing technique (SAFT). It is shown that the performance of the VS method may be unsatisfactory due to the distortion introduced by the diffraction effects of the aperture used for creating the VS element. A solution to this problem is proposed that consists of replacing the classical SAFT by the extended synthetic aperature focusing technique (ESAFT) algorithm presented in our earlier works. In ESAFT, the full geometry of the VS is modeled, instead of applying the simplified point source approximation used when VS is combined with classical SAFT. The proposed method yields a substantial improvement in spatial resolution compared to that obtained using SAFT. Performance of the proposed algorithm is first demonstrated on simulated data, then verified on real data acquired with an array system.