Prior to May 1,Fortune Company has never had any treasury stock transactions.A company repurchased 100 shares of its common stock on May 1 for $5,000.On July 1,it reissued 50 of these shares at $52 per share.On August 1,it reissued the remaining treasury shares at $49 per share.What is the balance in the Paid-in Capital,Treasury Stock account on August 2?
A)$2,600 Debit.
B)$2,600 Credit.
C)$100 Credit.
D)$50 Credit.
E)$50 Debit.

Question

Quizplus · Accepted Answer

The Paid-in Capital, Treasury Stock account reflects the excess amount received over the cost when treasury shares are reissued above their cost. The company repurchased shares for $5,000 (100 shares at $50 each). It reissued 50 shares at $52 per share, generating $2,600, and the remaining 50 shares at $49 per share, generating $2,450. The excess for the first reissue is $100 (50 shares * ($52 - $50)). There's no excess for the second reissue since shares were sold at less than the cost. Therefore, the balance is a $100 credit.

Prior to May 1,Fortune Company Has Never Had Any Treasury