Question

On January 1, 2022, the stockholders' equity section of Swifty Corporation shows common stock ($6 par value) $1,800,000; paid-in capital in excess of par $1,040,000; and retained earnings $1,230,000. During the year, the following treasury stock transactions occurred.

Mar. 1 Purchased 47,000 shares for cash at $15 per share.
July 1 Sold 12,000 treasury shares for cash at $17 per share.
Sept. 1 Sold 10,500 treasury shares for cash at $14 per share.

Answer 1

Treasury stock refers to shares of a company's own stock that have been repurchased by the company for future sale. The ending balance of treasury stock can be calculated by subtracting the total number of shares repurchased from the total number of shares sold.

Step-by-step explanation:

Treasury stock refers to shares of a company's own stock that have been repurchased by the company and are held by it as an investment. It is recorded as a reduction of stockholders' equity. In the given scenario, Swifty Corporation repurchased 47,000 shares on March 1, sold 12,000 treasury shares on July 1, and sold 10,500 treasury shares on September 1. To calculate the ending balance of treasury stock, we need to subtract the total number of shares repurchased from the total number of shares sold.

Starting with the initial number of shares of common stock ($1,800,000/$6 = 300,000 shares), the ending balance of treasury stock would be: 300,000 - 47,000 + 12,000 - 10,500 = 254,500 shares.