Question

Elroy Corporation repurchased 1,700 shares of its own stock for $45 per share. The stock has a par of $15 per share. A month later. Elroy resold 425 shares of the treasury stock for $53 per share.

Required
What is the balance of the Treasury Stock account after these transactions?
Balance of treasury stock _____

Answer 1

After Elroy Corporation repurchased 1,700 shares and resold 425 shares, the balance of the Treasury Stock account is $53,975.

Step-by-step explanation:

The balance of the Treasury Stock account after the transactions by Elroy Corporation would be calculated by first considering the cost of repurchasing the stock and then the proceeds from resale. Initially, Elroy Corporation repurchased 1,700 shares at $45 per share, resulting in a total cost of 1,700 shares × $45/share, which equals $76,500. Afterward, the company resold 425 of those shares at $53 per share, receiving 425 shares × $53/share, which equals $22,525. The balance in the Treasury Stock account would be the original cost of the repurchased shares minus the proceeds from the shares sold. Thus, $76,500 minus $22,525 equals $53,975.

The balance of the treasury stock after these transactions is $53,975.