Prior to June 30, a company has never had any treasury stock transactions. A company repurchased 100 shares of its common stock on June 30 for $40 per share. On July 20, it reissued 50 of these shares at $46 per share. On August 1, it reissued 20 of the shares at $38 per share. What is the balance in the Treasury Stock account on August 2?

Question

Quizplus · Accepted Answer

The balance in the Treasury Stock account on August 2 is calculated as follows:

- On June 30, the company repurchased 100 shares at $40 per share, resulting in a debit of $4,000 to the Treasury Stock account.
- On July 20, the company reissued 50 of these shares at $46 per share, resulting in a credit of $2,300 to the Treasury Stock account (50 shares x $46 per share).
- On August 1, the company reissued 20 of the shares at $38 per share, resulting in a credit of $760 to the Treasury Stock account (20 shares x $38 per share).
- The remaining 30 shares are held in Treasury Stock and have a cost of $1,940 ($4,000 - $2,300 - $760). This amount represents the balance in the Treasury Stock account on August 2.

Therefore, the correct answer is C) $1,200.

Prior to June 30, a Company Has Never Had Any