(Learning Objectives 3, 6: Show how treasury stock affects a company; prepare th
ID: 2461816 • Letter: #
Question
(Learning Objectives 3, 6: Show how treasury stock affects a company; prepare the stockholders’ equity section of a balance sheet) Sagebrush Software had the following selected account balances at December 31, 2012 (in thousands, except par value per share): Inventory $ 652 Property, plant, and equipment, net 859 Paid-in capital in excess of par 900 Treasury stock, 140 shares at cost 1,540 Accumulated othercomprehensive income (loss) (727)* Common stock, $2.25 par per share, 1,000 shares authorized, 280 shares issued $ 630 Retained earnings 2,260 Accounts receivable, net 1,200 Notes payable 1,188 *Debit balance Requirement 1. Prepare the stockholders’ equity section of Sagebrush Software’s balance sheet (in thousands). 2. How can Sagebrush have a larger balance of treasury stock than the sum of Common Stock and Paid-in Capital in Excess of Par?
Explanation / Answer
Treasury Stock has a larger balance than the sum of Common Stock and Paid-in Capital in Excess of Par because Sagebrush Software paid a higher price to acquire treasury stock than the price Sagebrush received when it issued its stock.
Stock Holder's Equity ( Thousands) Particular Amount in $ Common stock, $2.25 par, 1,000 shares authorized, 280 shares issued 630 Paid-in capital in excess of par 900 Retained earnings 2260 Treasury stock, common, 140 shares at cost -1540 Accumulated other comprehensive income (loss) -727 Total stockholders’ equity 1523Related Questions
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