Question

Prior to May 1, Fortune Company has never had any treasury stock transactions. A company repurchased 140 shares of its common stock on May 1 for $7,000. On July 1, it reissued 70 of these shares at $52 per share. On August 1, it reissued the remaining treasury shares at $49 per share. What is the balance in the Paid-in Capital, Treasury Stock account on August 2

Answer 1

Answer: $70

Explanation:

First, we need to calculate the purchase price per share and this will be:

= Purchase amount / Number of shares bought

= $7000 / 140

= $50 per share

Therefore, the balance in the Paid-in Capital, Treasury Stock account on August 2 will be:

= [70 × ($52 - $50)] + [70 × ($49 - $50)]

= (70 × $2) + ($70 × $-1)

= $140 - $70

= $70