Prior to May 1, Fortune Company has never had any treasury stock transactions. A company repurchased 100 shares of its common stock on May 1 for $5,000. On July 1, it reissued 50 of these shares at $52 per share. On August 1, it reissued the remaining treasury shares at $49 per share. What is the balance in the Paid-in Capital, Treasury Stock account on August 2?

Question

Quizplus · Accepted Answer

- On May 1, the company bought back 100 shares for $5,000, which reduces the Paid-in Capital, Treasury Stock account by $5,000.
- On July 1, the company reissued 50 of those shares at $52 per share, which generates additional proceeds of $2,600 ($52 x 50) and increases the Paid-in Capital, Treasury Stock account by $2,600.
- On August 1, the company reissued the remaining 50 shares at $49 per share, which generates additional proceeds of $2,450 ($49 x 50) and increases the Paid-in Capital, Treasury Stock account by $2,450.
- Therefore, the balance in the Paid-in Capital, Treasury Stock account on August 2 is $50 ($2,600 - $2,550).

Prior to May 1, Fortune Company Has Never Had Any