Question

Multiple Choice Question 82

An analysis of stockholders' equity of Bonita Industries as of January 1, 2018, is as follows:

Common stock, par value $20; authorized 100,000 shares;
	issued and outstanding 85000 shares	$1700000
Paid-in capital in excess of par		850000
Retained earnings		769000
Total		$3319000

Bonita uses the cost method of accounting for treasury stock and during 2018 entered into the following transactions:

Acquired 2460 shares of its stock for $78720.
Sold 1890 treasury shares at $36 per share.
Sold the remaining treasury shares at $18 per share.

Assuming no other equity transactions occurred during 2018, what should Bonita report at December 31, 2018, as total additional paid-in capital?

Answer 1

* Correct Answer is $ 850,000 = Total additional paid in capital on Dec 31 2018

Paid in Capital in excess of Par [given]	$850,000
Paid in Capital from Treasury Stock on sale of 1890 shares	$7,560
Paid in Capital from Treasury Stock on sale of 570 shares	($7,560)
Total Additional Paid in Capital	$850,000

Effect of Treasury Stock transactions

Treasury Shares	TOTAL	Amount or Cost	Additional Paid in Capital	Retained Earnings
2,460	$78,720 [at $32]	$78,720
(1,890)	$68,040 [at $36]	($60,480)	$7,560
(570)	$10,260 [at $ 18]	($18,240)	($7,560)	($420)
-	$157,020	$0	$0	($420)