Question

Elroy Corporation repurchased 3,800 shares of its own stock for $50 per share. The stock has a par of $10 per share. A month later Elroy resold 950 shares of the treasury stock for $58 per share. Required What is the balance of the Treasury Stock account after these transactions are recognized?

Answer 1

After repurchasing shares for $190,000 and reselling a portion for $55,100, the balance of Elroy Corporation's Treasury Stock account is $134,900.

Step-by-step explanation:

The balance of the Treasury Stock account after the given transactions is determined by first calculating the amount spent to repurchase the shares and then reducing that amount by the proceeds from the resale of some of those shares.

Initially, Elroy Corporation repurchased 3,800 shares for $50 per share:

• 3,800 shares x $50 per share = $190,000

Then, Elroy resold 950 shares of the treasury stock for $58 per share:

• 950 shares x $58 per share = $55,100

The proceeds from the resale are subtracted from the initial cost to determine the balance of the Treasury Stock account:

• $190,000 - $55,100 = $134,900

Therefore, after recognizing these transactions, the balance of the Treasury Stock account will be $134,900.