On March 31, 2018, Water Front, Inc. shows the following data on its balance sheet: $$\begin{array} { | l | r | }
\hline \text { Ctockholders' Equity } & \
\hline \text { Common Stock, } \$ 1 \text { Par, 1,180,000 shares authorized } & \
\hline 240,000 \text { shares issued, } 230,000 \text { shares outstanding } & \$ 240,000 \
\hline \text { Paid-In Capital in Excess of Par-Common } & 2,560,000 \
\hline \text { Retained Earnings } & 4,790,000 \
\hline \text { Treasury stock, 15,000 shares at } \$ 40 & \$ 600,000 \
\hline \text { Total Stockholders' Equity } & \$ 6,990,000 \
\hline
\end{array}$$ Assume that Water Front sells 1500 shares of treasury stock at $33 per share. What is total stockholders' equity after this transaction?

Question

On March 31, 2018, Water Front, Inc. shows the following data on its balance sheet: $$\begin{array} { | l | r | } 
\hline \text { Ctockholders' Equity } & \
\hline \text { Common Stock, } \$ 1 \text { Par, 1,180,000 shares authorized } & \
\hline 240,000 \text { shares issued, } 230,000 \text { shares outstanding } & \$ 240,000 \
\hline \text { Paid-In Capital in Excess of Par-Common } & 2,560,000 \
\hline \text { Retained Earnings } & 4,790,000 \
\hline \text { Treasury stock, 15,000 shares at } \$ 40 & \$ 600,000 \
\hline \text { Total Stockholders' Equity } & \$ 6,990,000 \
\hline
\end{array}$$ Assume that Water Front sells 1500 shares of treasury stock at $33 per share. What is total stockholders' equity after this transaction?

Quizplus · Accepted Answer

To solve this problem, we need to calculate the following:

1. The cost of treasury stock: 
1500 shares x $27 cost per share = $40,500

2. The proceeds from the sale of treasury stock: 
1500 shares x $33 selling price per share = $49,500

3. The change in stockholders' equity: 
Proceeds from sale of treasury stock ($49,500) - Cost of treasury stock ($40,500) = $9,000

4. Add the change in stockholders' equity to the existing total stockholders' equity: 
$7,030,500 + $9,000 = $7,039,500

Therefore, the correct answer is B.

On March 31, 2018, Water Front, Inc Assume That Water Front Sells 1500 Shares of Treasury Stock