HiTech Industries has a $13,000 credit balance in Paid-In Capital-Treasury Stock. It sells 1,000 shares of treasury stock, which the company reacquired at $59/share, for $56/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 sale of treasury stock at a loss will result in a debit to Paid-In Capital in Excess of Par-Treasury account. The loss on the sale of treasury stock is calculated as the difference between the reacquisition price and the sale price, which is $59 - $56 = $3 per share. Since 1,000 shares were sold, the total loss is $3,000. This loss will be debited to the Paid-In Capital in Excess of Par-Treasury account, reducing its balance from $13,000 to $10,000.

HiTech Industries Has a $13,000 Credit Balance in Paid-In Capital-Treasury