Q25E_3 - Horngren'S Financial And Managerial Accounting

Question

Journalizing treasury stock transactions and reporting stockholders’ equity

Southern Amusements Corporation had the following stockholders’ equity on 

November 30:

Paid-In Capital:

Common Stock—\(5 Par Value; 1,300 sharesauthorized, 250 shares issued and outstanding1,250

Retained Earnings50,000

Total Stockholders’ Equity \) 55,000

Stockholders’ Equity

Paid-In Capital in Excess of Par—Common 3,750

Total Paid-In Capital

\(5,000

On December 30, Southern purchased 200 shares of treasury stock at \)15 per share.

Requirements

3. How many shares of common stock are outstanding after the purchase oftreasury stock?

Step-by-Step Solution

Answer

50 shares of common stock are outstanding after the purchase of treasury stock.

Step 1: Basic Introduction

Treasury stock is the issued and outstanding shares of the corporation that is repurchased by the corporation from the open market.

Step 2: Common stock outstanding after treasury stock

The company is authorized for 1,300 shares and had 250common shares issued and outstanding. 200treasury stock purchased are no longer outstanding common stock, reducing the total outstanding common stock to 50 sharesissued and outstanding.