Question

In: Accounting

The stockholders' equity account balances of Kay Corporation for 2020 are given below: January 1 December...

The stockholders' equity account balances of Kay Corporation for 2020 are
given below:

                                                         January 1      December 31
Common stock ($12 par, 54,000 shares outstanding) .....   648,000         720,000
Paid-in capital – common stock ........................   540,000         594,000
Treasury stock (10,000 share; $16 cost per share) .....   160,000          36,800
Paid-in capital – treasury stock ......................     5,000            ?
Retained earnings .....................................   425,000            ?

During 2020, Kay Corporation entered into the following transactions:

March 23     Re-issued 2,400 of the treasury shares for $13 per share

June 9       Re-issued 3,700 of the treasury shares for $22 per share

August 15    Issued 6,000 shares of previously un-issued common stock

November 2   Re-issued 1,600 of the treasury shares for $14 per share

December 18  Declared and paid a $3.75 dividend per share on the
             outstanding shares of common stock

Kay Corporation reported a net income of $293,670 for 2020.

Calculate the balance in the paid-in capital - treasury stock account
at December 31, 2020.

Solutions

Expert Solution

Cost of the treasurry Stock = 10,000 shares @ $ 16 Cost per shares
January 01
Particulars Treasurry stock Paid in Capital - Treasurry stock
Openning Balance $                          1,60,000 $                      5,000
Adjustments:
March 23 - Re-issue 2,400 shares of @ 13 Per shares $                            -38,400 $                    -7,200
(2400 Shares X $ 16) (2400 Shares X $ 3)
June 09, Re-issue 3,700 Shares @ 22 Per shares $                            -59,200 $                   22,200
(3700 Shares X $ 16) (3700 Shares X $6)
Aug, 15 : No effect $                                       -   $                             -  
Nov, 02 : Re-issue of 1600 Shares @ 14 per shares $                            -25,600 $                    -3,200
(1600 Shares X $ 16) (1600 Shares X $2)
December - 18 : Declare of Dividend - No effect $                                       -   $                             -  
Closing Balance $                             36,800 $                   16,800
Answer = Balance in Paid in capital - Treasurry Stock Account = $ 16,800

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