Shown below is information relating to the shareholders' equity of Brookdale Corporation at December 31, 2010:
$\begin{array} { l r }
11 \% \text { non-cumulative preference share, } \$ 130 \text { par, 100,000 shares authorized, } & \$ 1,300,000 \
10,000 \text { shares issued } & \
\text { Ordinary shares, } \$ 1.25 \text { par, } 1,000,000 \text { shares authorized, } 600,000 \text { shares } & 750,000 \
\text { issued (of which } 6,000 \text { are held in treasury ) } & \
\text { Share premium: preference shares } & 500,000 \
\text { Share premium: ordinary shares } & 900,000 \
\text { Share premium: treasury share transactions } & 6,000 \
\text { Treasury shares (at cost: } 6,000 \text { ordinary shares) } & ( 192,000 ) \
\text { Retained earnings } & 1,350,000 )
\end{array}$

-Refer to the above data. If Brookdale Corporation had reacquired 7,000 treasury shares early in 2010, and this was the company's only treasury share transaction, then some treasury share must have been sold during 2010 for:

Question

Shown below is information relating to the shareholders' equity of Brookdale Corporation at December 31, 2010:
$\begin{array} { l r } 
11 \% \text { non-cumulative preference share, } \$ 130 \text { par, 100,000 shares authorized, } & \$ 1,300,000 \
10,000 \text { shares issued } & \
\text { Ordinary shares, } \$ 1.25 \text { par, } 1,000,000 \text { shares authorized, } 600,000 \text { shares } & 750,000 \
\text { issued (of which } 6,000 \text { are held in treasury ) } & \
\text { Share premium: preference shares } & 500,000 \
\text { Share premium: ordinary shares } & 900,000 \
\text { Share premium: treasury share transactions } & 6,000 \
\text { Treasury shares (at cost: } 6,000 \text { ordinary shares) } & ( 192,000 ) \
\text { Retained earnings } & 1,350,000 )
\end{array}$

-Refer to the above data. If Brookdale Corporation had reacquired 7,000 treasury shares early in 2010, and this was the company's only treasury share transaction, then some treasury share must have been sold during 2010 for:

Quizplus · Accepted Answer

The balance in the treasury stock account decreased from $218,000 to $169,000, a difference of $49,000. Dividing by the number of shares reacquired (7,000) gives us a cost of $7 per share. Since the company did not reacquire any additional shares, the only way for the balance in the treasury stock account to decrease is if some shares were sold during the year, at a higher price than $7 per share in order to pay for dividends and repurchases. The only option that is higher than $7 per share is $38 per share, so B is the correct answer.

Shown Below Is Information Relating to the Shareholders' Equity of Brookdale