The following two items are disclosed in the stockholders' equity section of Riverside Corporation's December 31,2018,balance sheet: If the company had reacquired 700 shares of treasury stock in February of 2018,then for what amount was the other treasury stock sold for during 2018?

Question

The following two items are disclosed in the stockholders' equity section of Riverside Corporation's December 31,2018,balance sheet:  If the company had reacquired 700 shares of treasury stock in February of 2018,then for what amount was the other treasury stock sold for during 2018?

Quizplus · Accepted Answer

The disclosed treasury stock amount is $500,000 at cost and the par value is $1 per share. If 700 shares were reacquired in February 2018, then the remaining treasury stock would have been 900 shares (1,600-700). The cost for the 900 shares would be $500,000, which gives a cost per share of $555.56. If the other treasury stock was sold during the year, then the proceeds from the sale would be higher than the cost. The only option that reflects this is C, where the stock is sold for $2 per share above its cost.

The Following Two Items Are Disclosed in the Stockholders' Equity