[The following information applies to the questions displayed below.]
Shown below is information relating to the stockholders' equity of Clydesdale Corporation at December 31,2015:

-If Clydesdale Corporation had reacquired the 8,000 shares of treasury stock early in 2018,what was the purchase price per share?

Question

[The following information applies to the questions displayed below.]
Shown below is information relating to the stockholders' equity of Clydesdale Corporation at December 31,2015:
 
-If Clydesdale Corporation had reacquired the 8,000 shares of treasury stock early in 2018,what was the purchase price per share?

Quizplus · Accepted Answer

To determine the purchase price per share of the treasury stock, we need to use the formula: 
Purchase price per share = Total cost of treasury stock / Number of shares reacquired 
In this case, we know that Clydesdale Corporation reacquired 8,000 shares of treasury stock, which represents 4% of the outstanding shares as of December 31, 2015. Therefore, the total number of outstanding shares must be: 
Total outstanding shares = 8,000 / 0.04 = 200,000 
We also know that the amount of treasury stock as of December 31, 2015 was $4,800,000. Since the total number of treasury shares was not given, we can assume that this amount represents the cost of all the treasury stock that Clydesdale had repurchased until that date. Therefore, the total cost of the 8,000 shares reacquired in 2018 is the difference between the amount of treasury stock as of December 31, 2015 and the treasury stock remaining after the repurchase: 
Total cost of 8,000 shares = $4,800,000 - (8,000 / 200,000) x $20,000,000 = $3,800,000 
Finally, we can calculate the purchase price per share: 
Purchase price per share = $3,800,000 / 8,000 = $475 
The correct answer is therefore choice (C): $24 per share.

[The Following Information Applies to the Questions Displayed Below