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Prior to May 1, Fortune Company has never had any treasury stock transactions. A company repurchased 130 shares of its common stock on May 1 for $6,500. On July 1, it reissued 65 of these shares at $53
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Prior to May 1, Fortune Company has never had any treasury stock transactions. A company repurchased 130 shares of its common stock on May 1 for $6,500. On July 1, it reissued 65 of these shares at $53 per share. On August 1, it reissued the remaining treasury shares at $48 per share. What is the balance in the Paid-in Capital, Treasury Stock account on August 2

User Hendrixski
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10 votes

Answer:

Fortune Company

There is a balance of ($65) in the Paid-in Capital, Treasury Stock account on August 2.

However, this balance will be transferred to the Additional Paid-in Capital account at year-end, since there are no outstanding shares for the Treasury Stock account.

Step-by-step explanation:

a) Data and Calculations:

May 1 Repurchase of 130 shares (Treasury Stock) = $6,500

July 1 Reissue of 65 shares at $53 per share = (3,445)

August 1 Reissue of 65 shares at $48 per share = (3,120)

August 2, Balance in the Paid-in Capital = ($65)

b) The Treasury Stock account is a contra Paid-in Capital account which records transactions involving the repurchase and reissue of treasury shares. Treasury shares represent the company's own shares which are repurchased from its investors.

User CWright
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