Question

In previous years, Cox Transport reacquired 2 million treasury shares at $24 per share and, later, 1 million treasury shares at $27 per share. What amount will Cox’s paid-in capital—share repurchase increase if it now sells 2 million treasury shares at $29 per share and determines the cost of treasury shares by the FIFO method? (Enter answer in millions (i.e., 10,000,000 should be entered as 10).)

Answer 1

Cox’s paid-in capital—share repurchase will increase by $10 million as determined in the following journal entry: ($ in millions)

Cash (2 million shares x $29) .......................................... 58

Paid-in capital—share repurchase (difference) . . . . . . . . . . . . . . . ......10 . Treasury stock (2 million shares x $24*).............................................. 48 * 2 million shares x $24 = $48 million

1 million shares x $27 = $27million

$75 million