Carbide Corporation purchased 36,000 shares of its own stock for $47 per share.

Question

Carbide Corporation purchased 36,000 shares of its own stock for $47 per share. The next year, the company sold 3,000 shares for $42 per share and the following year, it sold 10,000 shares for $29 per share.

Determine the impact of each of these transactions on the following classifications: (Enter a positive value for increase and a negative value for decrease. If no change, leave cell blank.)

                                                  

       

                                                                            

Asset

liabilities

Stockholder equity

Net income

Purchase 36,000 shares of treasury stock

Sold 3,000 shares

Sold 10,000 shares

Carbide Corporation purchased 36,000 shares of its own stock for $47 per share. The next year, the company sold 3,000 shares for $42 per share and the following year, it sold 10,000 shares for $29 per share.

Determine the impact of each of these transactions on the following classifications: (Enter a positive value for increase and a negative value for decrease. If no change, leave cell blank.)

Explanation / Answer

Working

Purchase Treasury Stock = 36000*47 = 1692000

Sale of Treasury Stock = 3000*42 = $ 126000

Loss on tresury stock is being adjusted through retained earning where net effect is zero, Since it is loss on Treasury stock is being apportioned directly through retained Earning and there fore no treatment in Net income Statement

Sale of Treasury stock on next following year = 10000*29 = 290000

                                                     Asset liabilities Stockholder equity Net income Purchase 36,000 shares of treasury stock -1692000 0 -1692000 0 Sold 3,000 shares 126000 0 126000 0 Sold 10,000 shares 290000 0 290000 0

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