Charmed, Inc. has a $30,000 credit balance in Paid-In Capital-Treasury Stock. It sells 600 shares of treasury stock, which the company reacquired at $22/share, for $18/share. After the transaction, what will the balance be in the Paid-In Capital in Excess of Par-Treasury account?

Question

Quizplus · Accepted Answer

The total amount Charmed, Inc. received from selling the treasury stock is 600 shares x $18/share = $10,800.

Since the treasury stock was reacquired at $22/share, the cost of the shares is 600 shares x $22/share = $13,200.

Therefore, the gain on the sale of treasury stock is $10,800 - $13,200 = -$2,400. This amount is subtracted from the credit balance in the Paid-In Capital-Treasury Stock account.

So, the new balance in the Paid-In Capital-Treasury Stock account is $30,000 - $2,400 = $27,600 credit.

Since the stock was sold at a discount, there is no additional amount to be added to the Paid-In Capital in Excess of Par-Treasury account. Therefore, the balance in this account remains the same, which is $0 (not mentioned in the question).