The following two items are disclosed in the stockholders' equity section of Riverside Corporation's December 31,2015,balance sheet: If the company had reacquired 700 shares of treasury stock in February of 2015,then for what amount was the other treasury stock sold for during 2015?

Question

The following two items are disclosed in the stockholders' equity section of Riverside Corporation's December 31,2015,balance sheet:  If the company had reacquired 700 shares of treasury stock in February of 2015,then for what amount was the other treasury stock sold for during 2015?

Quizplus · Accepted Answer

The first disclosed item is the common stock which has a par value of $10 per share and an issuance of 10,000 shares for a total of $100,000. The second disclosed item is the treasury stock which has a cost of $13,400 and an issuance of 1,000 shares. If the company reacquired 700 shares of treasury stock, then the remaining treasury stock is 300 shares. Since the cost of the treasury stock is disclosed, we can calculate the average cost per share as $13,400 divided by 1,000 shares, which is $13.4 per share. Therefore, if the remaining 300 shares were sold during 2015, they were sold for $2 per share above their cost, which is $15.4 per share. Therefore, the correct answer is C.

The Following Two Items Are Disclosed in the Stockholders' Equity