The Stockholders\' Equity section of Taco Reef, Inc.\'s balance sheet on January
ID: 2740171 • Letter: T
Question
The Stockholders' Equity section of Taco Reef, Inc.'s balance sheet on January 1, 2015, appeared as follows:
Common stock, $30 par, 20,000 shares issued and outstanding--$600,000
Additional paid-in capital--Common 240,000
Retained earnings--700,000
Total stockholders' equity--$1,540,000
On March 1, 2015, Taco Reef reacquired 4,000 shares of common stock at $50 per share. All common shares were originally sold for $42 each. How much should be reported in the treasury stock account on the March 31, 2015 balance sheet?
a. $168,000
b. $200,000
c. $128,000
d. $32,000
Explanation / Answer
Treasury stock can be recorded as per cost method, where the purchase of treasury is recorded at actual cost of purchase i.e $ 50 in this case.
Treasury Stock = 4000 * 50 = $ 200,000
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