Question

On its balance sheet, Walgreen Co. reports treasury stock at cost of $4,114 million. The company has a total of 1,100,000,000 shares issued and 950,000,000 shares outstanding. What average price did Walgreen pay for treasury shares

Answer 1

$27.43 per treasury stock

Step-by-step explanation:

treasury stock in $ = $4,114,000,000

amount of stocks held by treasury = total stocks issued - stocks outstanding = 1,100,000,000 - 950,000,000 = 150,000,000

average price paid for each treasury stock = $4,114,000,000 / 150,000,000 stocks = $27.426667 ≈ $27.43

Treasury stock is a contra equity account that decreases stockholders' equity. Generally, when the stocks are repurchased, the journal entry is debit Treasury stocks and credit Cash. Any adjustments to equity accounts are made when they are reissued depending on the market price.