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lilyc
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Joined: 19 Sep 2009
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Posts: 3

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?

prettynpink
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Joined: 08 Feb 2009
Location: United States
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Posts: 112

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

lovethepirk
Major Contributor

Joined: 10 Jul 2009
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Posts: 295

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

bryris
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Joined: 07 Dec 2008
Location: United States
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Posts: 624

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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Joined: 19 Sep 2009
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Posts: 3

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

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

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