Caesar & Company reacquired 30,000 shares of its common stock for $10 per share on March 1.On April 1 they sold 8,000 shares for $16 per share.On May 1 they sold 6,000 shares for $5 per share.Assuming no prior balance in the Additional Paid-in Capital From Treasury Stock Transactions,what is the ending balance in this account following these transactions?

Question

Quizplus · Accepted Answer

The Additional Paid-in Capital From Treasury Stock Transactions account is used to record the difference between the cost of the shares repurchased and their par or stated value. 
On March 1st, the company reacquired 30,000 shares for $10 per share, which means the cost was $300,000. Since there is no prior balance in the account, the entire amount will be debited to this account.

On April 1, they sold 8,000 shares for $16 per share, which means they received $128,000. The cost of these shares was $80,000 (8,000 shares x $10 per share), so the difference of $48,000 will be credited to the Additional Paid-in Capital From Treasury Stock Transactions account.

On May 1, they sold 6,000 shares for $5 per share, which means they received $30,000. The cost of these shares was $60,000 (6,000 shares x $10 per share), so there is a loss of $30,000. This loss will be debited to the Additional Paid-in Capital From Treasury Stock Transactions account.

Therefore, the ending balance in the Additional Paid-in Capital From Treasury Stock Transactions account will be a credit of $18,000 ($48,000 credit - $30,000 debit).

Caesar & Company Reacquired 30,000 Shares of Its Common Stock