Question

Prior to June 30, a company has never had any treasury stock transactions. A company repurchased 100 shares of its common stock on June 30 for $40 per share. On July 20, it reissued 50 of these shares at $46 per share. On August 1, it reissued 20 of the shares at $38 per share. What is the balance in the Treasury Stock account on August 2? Multiple Choice O $5.050 O $2.600 O $100 o

Answer 1

Solution:

As per the information given in the question we have

June 30 : The company repurchased 100 shares of its common stock at repurchase price of $ 40 per share

Thus the Treasury stock account will now have a balance of 100 shares at ( 100 shares * $ 40 )

= $ 4,000

July 20 : The company reissued 50 shares of its common stock

Thus the Treasury stock account balance will see a decrease in number of shares by 50 shares.

The treasury stock account will be credited by the ( No. of shares reissued * Repurchase price per share)

Thus the Treasury stock account will now have a balance of ( 100 Shares - 50 shares ) at ( 50 shares * $ 40 )

= $ 2,000

August 1 : The company reissued 20 shares of its common stock

Thus the Treasury stock account balance will see a decrease in number of shares by 20 shares.

The treasury stock account will be credited by the ( No. of shares reissued * Repurchase price per share)

Thus the Treasury stock account will now have a balance of ( 50 Shares - 20 shares ) at ( 30 shares * $ 40 )

= $ 1,200

Thus the balance in Treasury stock account on August 2 is = $ 1,200

The solution is option 4 = $ 1,200