Question

The Stockholders' Equity section of Deer Lakes Manor's balance sheet on January 1, 2016, appeared as follows:

Common stock, $30 par, 20,000 shares issued and outstanding $600,000
Additional paid-in capital—Common $240,000
Retained earnings $700,000
Total stockholders' equity$1,540,000
On March 1, 2016, Deer Lakes reacquired 4,000 shares of common stock at $50 per share. All common shares were originally sold for $42 each. How much should be reported in the treasury stock account on the March 31, 2016, balance sheet?
a. $168,000
b. $32,000
c. $200,000
d. $128,000

Answer 1

The treasury stock account should report $200,000 after the reacquisition of 4,000 shares at $50 per share. the treasury stock account would report $200,000 (4,000 shares × $50 per share).

Step-by-step explanation:

The student is asking how much should be reported in the treasury stock account on the March 31, 2016, balance sheet after Deer Lakes Manor reacquired 4,000 shares of common stock at $50 per share. To calculate this, you multiply the reacquisition price per share by the number of shares reacquired. Therefore, the treasury stock account would report $200,000 (4,000 shares × $50 per share).

To determine the amount to be reported in the treasury stock account on the March 31, 2016, balance sheet, we need to calculate the cost of the treasury stock. Deer Lakes Manor reacquired 4,000 shares of common stock at $50 per share, which gives us a total cost of $200,000 (4,000 shares x $50 per share). This amount should be reported in the treasury stock account on the balance sheet.The student is asking how much should be reported in the treasury stock account on the March 31, 2016, balance sheet after Deer Lakes Manor reacquired 4,000 shares of common stock at $50 per share. To calculate this, you multiply the reacquisition price per share by the number of shares reacquired. Therefore, the treasury stock account would report $200,000 (4,000 shares × $50 per share).