A corporation purchases 1,000 shares of its own common stock for $4,000 on Feb.

Question

A corporation purchases 1,000 shares of its own common stock for $4,000 on Feb. 13. On April 13, half of the treasury stock was sold for $3,000. On April 26, the other half of the treasury stock was sold for $1,800. The entry to record the April 26 sale would include

a debit to Paid-in Capital from the Sale of Treasury Stock for $200.

a credit to Cash for $1,800.

a debit to Treasury Stock for $2,000.

a credit to Paid-in Capital from the Sale of Treasury Stock for $1,200.

What is the total stockholders' equity based on the following data?

$1,275,000

$900,000

$1,225,000

$1,325,000

Explanation / Answer

The entry for Apr 26 sale is as follows 26-Apr Cash Dr 1800 Paid in capital from sale of treasury stock Dr 200                   Treasury stock Cr 2000 Hence 1st option is correct Total stockholders equity is as follows Common stock 900000 Add : Excess of Issue price over par 375000 Less : Retained earnings ( deficit) 50000 Total stockholders equity 1225000 Hence 3rd option is correct

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