Question

At January 1, 2020, Betty DeRose, Inc. reported paid-in capital - treasury stock of $2,000 and retained earnings of $49,000. Betty DeRose, Inc. entered into the following transactions during 2020: a. Re-acquired 5,000 shares of its $8 par value common stock by paying $18 per share. b. Re-issued 900 of the shares that were re-acquired in (a) for $21 per share. c. Re-issued 1,200 of the shares that were re-acquired in (a) for $13 per share. d. Re-issued 800 of the shares that were re-acquired in (a) for $20 per share. e. Re-issued 1,100 of the shares that were re-acquired in (a) for $17 per share. Calculate the balance in the paid-in capital - treasury stock account after all five transactions above are recorded.

Answer 1

Paid-in capital - treasury stock = 2000 Credit

Retained Earnings = 49000

a. Re-acquired 5,000 shares of its $8 par value common stock by paying $18 per share:

Cash paid on repurchase of Treasury Stock = 5000*18 = 90000

Paid-in capital - treasury stock = 5000*10 = 50000 Debit

b. Re-issued 900 of the shares that were re-acquired in (a) for $21 per share.

Cash received on sale of repurchase stock = 900*21 = 18900

Common Stock = 900*8 = 7200

Paid-in capital - treasury stock = 900*13 = 11700 Credit

Balance in Paid-in capital - treasury stock = 2000 - 50000 + 11700 = 36300 Debit

c. Re-issued 1,200 of the shares that were re-acquired in (a) for $13 per share.

Cash received on sale of repurchase stock = 1200*13 = 15600

Common Stock = 1200*8 = 9600

Paid-in capital - treasury stock = 1200*5 = 6000 Credit

Balance in Paid-in capital - treasury stock = 6000 - 36300 = 30300 Debit

d. Re-issued 800 of the shares that were re-acquired in (a) for $20 per share.

Cash received on sale of repurchase stock = 800*20 = 16000

Common Stock = 800*8 = 6400

Paid-in capital - treasury stock = 800*12 = 9600 Credit

Balance in Paid-in capital - treasury stock = 9600 - 30300 = 20700 Debit

e. Re-issued 1,100 of the shares that were re-acquired in (a) for $17 per share.

Cash received on sale of repurchase stock = 1100*17 = 18700

Common Stock = 1100*8 = 8800

Paid-in capital - treasury stock = 1100*9 = 9900 Credit

Balance in Paid-in capital - treasury stock = 9900 - 18700 = 8800 Debit

Balance in the paid-in capital - treasury stock account after all five transactions = 8800 Debit