Question

Pember Corporation started business in 2007 by issuing 200,000 shares of $20 par common stock for $36 each. In 2012, 30,000 of these shares were purchased for $52 per share by Pember Corporation and held as treasury stock. On June 15, 2013, these 30,000 shares were exchanged for a piece of property that had an assessed value of $810,000. Perber's stock is actively traded and had a market price of $60 on June 15, 2013. 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. $1,200,000. b. $720,000. c. $585,000. d. $240,000.

Answer 1

Answer:

d. $240,000.

Explanation:

The computation of the amount of paid-in capital from treasury stock is calculated by applying the formula which is shown below:

= Number of shares × (Market price per share - purchase price per share)

= 30,000 shares × ($60 per share - $52 per share)

= 30,000 × $8 per share

=  $240,000

The other items which are mentioned in the question are irrelevant. Therefore, it is not to be considered in the computation part.