Carter Co. began its business last year and issued 10,000 shares of commons stoc

Question

Carter Co. began its business last year and issued 10,000 shares of commons stock at $4 per share. The par value of the stock is $1 per share. During January of the current year, Carter bought back 500 shares at $6 per share, which were reported by Carter as treasury stock. The treasury stock shares were reissued later in the current year at $10 per share. Carter used the cost method to account for its treasury stock transactions. What amount should Carter report as paid-in capital related to its treasury stock transactions on its balance sheet for the current year?

Select one:

a. $5,000

b. $4,500

c. $20,000

d. $3,500

e. none of the solutions shown

f. $1,500

g. $2,000

Explanation / Answer

As the reissue price is higher than cost, under cost method, this balamce amount is recorded as Paid-in capital related to treasury stock.

Therefore amount to be reported = 500 shares x (6-4) = $200

Option G is the answer

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.