Waltham Corporation was organized on January 2 with 100,000 authorized shares of $10 par value common stock.During the year,Waltham had the following capital transactions: Waltham used the par value method to record the purchase of the treasury shares.
What would be the balance in the paid-in capital from treasury stock account at December 31?

Question

Waltham Corporation was organized on January 2 with 100,000 authorized shares of $10 par value common stock.During the year,Waltham had the following capital transactions:  Waltham used the par value method to record the purchase of the treasury shares.
What would be the balance in the paid-in capital from treasury stock account at December 31?

Quizplus · Accepted Answer

The purchase of 3,000 shares of treasury stock at $15 per share reduces the paid-in capital from treasury stock account by $45,000 (3,000 shares x $15). On the other hand, the sale of 1,500 shares of treasury stock at $18 per share increases the paid-in capital from treasury stock account by $27,000 (1,500 shares x $18). Therefore, the net reduction of the paid-in capital from treasury stock account is $18,000 ($45,000 - $27,000). Thus, the balance in the paid-in capital from treasury stock account at December 31 is $15,000 ($33,000 beginning balance - $18,000 net reduction during the year).

Waltham Corporation Was Organized on January 2 with 100,000 Authorized