Prior to May 1, Fortune Company has never had any treasury stock transactions. A company repurchased 180 shares of its common stock on May 1 for $9,000. On July 1, it reissued 90 of these shares at $52 per share. On August 1, it reissued the remaining treasury shares at $49 per share. What is the balance in the Paid-in Capital, Treasury Stock account on August 2?
Ans:
Purchase of 180 Treasury stock @ $9,000.
Cost per share : $9,000 / 180 = 50 per share.
Reissue treasury stock : 90
Reissue price : $52
Amount credited to treasury stock : 90 * $50 = $4,500
Balance amount credited to Paid in capital : 90 * $2 = $180
Balance treasury stock : 90
Reissue Price : $49
Amount credited to treasury stock : 90 * $50 = $4,500
Balance amount debited to Paid in capital : 90 * $1 = $90
So the balance in on August 2 :
Paid in Capital : $180 - $90 = $90
Treasury Stock : $9,000 - $4,500 - $4,500 = $0
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