Question

On March 1st, Nichols Corporation purchased 1,000 shares of previously issued common stock, paying $3 per share. On April 1st, Nichols sold 600 shares at $4 per share. What is the amount of Paid-In Capital from Treasury Stock Transactions for the sale of 600 shares?

Answer 1

The Paid-In Capital from Treasury Stock Transactions for the sale of 600 shares is $600.

Explanation:

Total number of shares = 1000.

Sales price is
`600*4=2400` dollars

When treasury stocks are sold, cash is debited for the sales price.

And simultaneously, the treasury stock is credited for the purchase price of the stock =
`600*3=1800` dollars

Paid-In Capital from Treasury Stock Transactions =
`2400-1800=600` dollars (difference between sale and purchase price)

So, the amount of Paid-In Capital from Treasury Stock Transactions for the sale of 600 shares is $600.