Question

Pember Corporation started business in 2012 by issuing 200,000 shares of $20 par common stock for $27 each. In 2017, 25,000 of these shares were purchased for $39 per share by Pember Corporation and held as treasury stock. On June 15, 2018, these 25,000 shares were exchanged for a piece of property that had an assessed value of $760,000. Pember's stock is actively traded and had a market price of $45 on June 15, 2018. The cost method is used to account for treasury stock. The amount of paid-in capital from treasury stock transactions resulting from the above events would be A) $750,000. B) $450,000. C) $215,000. D) $150,000.

Answer 1

Answer:

Option D is the correct option. Please choose option D that is $150,000.

Explanation:

Amount of paid-in capital from treasury stock transactions = Shares exchanged * (Market Price - Share purchase Cost)

Where Shares exchanged = 25000

Market price = $45

Cost of share = $39

Therefore, the amount of paid-in capital from treasury stock transactions = 25000 shares * (45 - 39) = $150,000

Option D $150,000 is correct