The following data has been collected about Keller Company's stockholders' equity accounts: $\begin{array}{lr}
\text { Common stock } \$ 10 \text { par value } 20,000 \text { shares } & \$ 100,000 \
\text { authorized and } 10,000 \text { shares issued, } 9,000 \text { shares outstanding } & \
\text { Paid-in capital in excess of par value, common stock } & 50,000 \
\text { Retained earnings } & 25,000 \
\text { Treasury stock } & 11,500
\end{array}$

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Assuming the treasury shares were all purchased at the same price, the cost per share of the treasury stock is:

Question

The following data has been collected about Keller Company's stockholders' equity accounts: $\begin{array}{lr}
\text { Common stock } \$ 10 \text { par value } 20,000 \text { shares } & \$ 100,000 \
\text { authorized and } 10,000 \text { shares issued, } 9,000 \text { shares outstanding } & \
\text { Paid-in capital in excess of par value, common stock } & 50,000 \
\text { Retained earnings } & 25,000 \
\text { Treasury stock } & 11,500
\end{array}$

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Assuming the treasury shares were all purchased at the same price, the cost per share of the treasury stock is:

Quizplus · Accepted Answer

We can calculate the cost per share of the treasury stock by dividing the total cost of treasury shares by the number of treasury shares outstanding. The total cost of treasury shares can be found by subtracting the balance of treasury stock from the total stockholders' equity:
Total stockholders' equity = Common stock + Paid-in capital in excess of par value, common stock + Retained earnings + Treasury stock
Total stockholders' equity = $100,000 + $50,000 + $25,000 + (-$11,500) = $163,500
Number of treasury shares outstanding = 1,000 (10,000 - 9,000)
Cost per share of treasury stock = Total cost of treasury shares / Number of treasury shares outstanding
Cost per share of treasury stock = (-$11,500) / 1,000 = -$11.50 (Note that the cost is negative because treasury stock is a contra-equity account.)
Therefore, the cost per share of the treasury stock is $11.50.

The Following Data Has Been Collected About Keller Company's Stockholders