The following two items are disclosed in the shareholders' equity section of Riverside Corporation's December 31, 2009, balance sheet: $\begin{array}{llr}
\text {Treasury share (200 shares, at cost) } &\$2,000\
\text { Share premium: treasuy share transactions } &\$1,000

\end{array}$
If the company had reacquired 700 treasury shares in February of 2009, then for what amount was the other treasury share sold for during 2009?

Question

The following two items are disclosed in the shareholders' equity section of Riverside Corporation's December 31, 2009, balance sheet: $\begin{array}{llr}
  \text {Treasury share (200 shares, at cost)  } &\$2,000\
 \text { Share premium: treasuy share transactions } &\$1,000

\end{array}$
 If the company had reacquired 700 treasury shares in February of 2009, then for what amount was the other treasury share sold for during 2009?

Quizplus · Accepted Answer

The treasury stock account decreased by $1,400, which represents the cost of the 700 shares reacquired ($1,400/700 shares = $2 per share). The additional treasury share sold would have been sold at a price above its cost, but there is not enough information given to determine how much above cost it was sold for. Therefore, the best answer is C, which states that it was sold for $2 per share above its cost.

The Following Two Items Are Disclosed in the Shareholders' Equity