Question

Petite fashions issued 500,000 of its 2 million shares of authorized common stock. At the end of the accounting period, 450,000 shares are outstanding. How many shares of treasury stock does petite fashions have?

a. 450,000 shares.
b. 1.5 million shares.
c. 50,000 shares.
d. 0 shares.

Answer 1

Petite Fashions has 50,000 shares of treasury stock, which is calculated by subtracting the number of outstanding shares (450,000) from the number of issued shares (500,000).

Step-by-step explanation:

To determine how many shares of treasury stock Petite Fashions has, we must look at the difference between the issued shares and the outstanding shares. Petite Fashions issued 500,000 shares and has 450,000 shares outstanding. The difference between these two numbers indicates the company has reacquired some of the issued shares, which are now held as treasury stock. Treasury stock is the amount of shares that have been issued and then reacquired by the company. Therefore, to solve for the number of shares of treasury stock Petite Fashions has, we subtract the number of outstanding shares from the number of issued shares: 500,000 issued - 450,000 outstanding = 50,000 treasury shares. The correct answer is c. 50,000 shares.