Question

Worthy Ships initially issued 400,000 shares of $1 par stock for $2,000,000 in 2021. In 2023, the company repurchased 40,000 shares for $400,000. In 2024. 20,000 of the repurchased shares were resold for $320,000. In its balance sheet dated December 31, 2024, C. Worthy's treasury stock account shows a balance of Multiple Choice $200,000 $80,000 $400,000

Answer 1

Answer:

Worthy Ships:

Treasury Stock account balance would be $80,000.

Explanation:

Treasury Stock account is a contra account to the Common Stock account.  Using the cost method, the account will have a debit entry and balance of $400,000 in 2023.  In 2024, with the resale of shares, the account will have a credit entry of $320,000.  This would bring the balance to $80,000 at the end of 2024.