Question

Wlusions, Inc. reacquired 22,000 shares of its common stock for $15 per share on June 1. On July 1 they sold 9,000 treasury shares for $22 per share. On August 1 they sold 8,000 treasury shares for $14 per share. Assuming no prior balance in the Additional Paid - in Capital from Treasury Stock Transactions account, what is the ending balance in this account following these transactions? O A. $8,000 credit balance O B. $55,000 dobit balance OC. $55,000 credit balance OD. 59,000 debit balance

Answer 1

Reacquired 22,000 common stock for $15 per share on June 1st.

Sold 9,000 Treasury shares at $22 per share on July 1st.

= 9,000 X ($22 - $15)

= $63,000

$63,000 increases Additional paid in capital from treasury stock.

Sold 8,000 Treasury shares at $14 per share on August 1st.

= 8,000 X ($14 - $15)

= ($8,000)

$8,000 reduces Additional paid in capital from treasury stock.

Balance = $63,000 - $8,000 = $55,000

Additional paid in capital increases it has a credit balance and if additional paid in capital decreases it has a debit balance. The balance of $55,000 is because of increase, which is a credit balance.

$55,000 credit balance

Option C.