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Subject Topic: Treasury stock (Topic Closed Topic Closed) Post ReplyPost New Topic
  
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lilyc
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Posted: 19 Sep 2009 at 22:45 | IP Logged  

On 01/01/x1, B corp. began operation and issued 30,000 shares of $5 par common stock for $9/share. On 06/30, the company bought back 10,000 shares for $8/share. Then, on 09/15, the company resold 5000 shares for $12/share. What amount of total additional paid-in capital should B Corp. report on its 12/31/x1 balance sheet if B uses the par value method to account for its treasury stock?

A. $45,000
B. $120,000
C. $140,000
D. $165,000

The answer is D. But I think it should be $125,000. Anyone can help me on this?
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prettynpink
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Posted: 19 Sep 2009 at 23:56 | IP Logged  

issuance
dr cash 270000
cr cs 150000
apic 120000
ts at par
TS 50000
apic 40000
cash 80000
resold
cash 60000
ts 25000
apic 35000
total apic 115000

 

 

this is my answer..i cant figure out why it is d

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lovethepirk
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Posted: 20 Sep 2009 at 01:22 | IP Logged  

Pretty,

I think your ts debit of 40000 should have been 30000, shouldn't it?

That would get you to 125000

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bryris
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Posted: 20 Sep 2009 at 09:43 | IP Logged  

My thoughts:

Cash 270,000
   CS par 150,000
   APIC    120,000

CS par 50,000
APIC    40,000
    Cash 80,000
    APIC-TS 10,000

Cash 60,000
    CS 25,000
    APIC 35,000

Here are what I feel the entries are. If you add of the credits, they do equal 165,000. The problem is, we've debited the AIPC account. What they say should be the answer and the real answer are off by the amount of the original APIC attributed to the stock we purchased for the treasury.

Where did this question come from and what is the explanation?

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lilyc
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Posted: 21 Sep 2009 at 21:40 | IP Logged  

it comes from Becker Final review. No explanation, just the entries.
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