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Multiple Choice Question 82 An analysis of stockholders' equity of Bonita Industries as of January 1, 2018,...

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Accounting

Multiple Choice Question 82

An analysis of stockholders' equity of Bonita Industries as ofJanuary 1, 2018, is as follows:

Common stock, par value$20; authorized 100,000 shares;
issued and outstanding 85000shares

$1700000

Paid-in capital inexcess of par

850000

Retained earnings

769000

Total

$3319000


Bonita uses the cost method of accounting for treasury stock andduring 2018 entered into the following transactions:

Acquired 2460 shares of its stock for $78720.
Sold 1890 treasury shares at $36 per share.
Sold the remaining treasury shares at $18 per share.

Assuming no other equity transactions occurred during 2018, whatshould Bonita report at December 31, 2018, as total additionalpaid-in capital?

Answer & Explanation Solved by verified expert
3.9 Ratings (722 Votes)

* Correct Answer is $ 850,000 = Total additional paid in capital on Dec 31 2018

Paid in Capital in excess of Par [given] $850,000
Paid in Capital from Treasury Stock on sale of 1890 shares $7,560
Paid in Capital from Treasury Stock on sale of 570 shares ($7,560)
Total Additional Paid in Capital $850,000

Effect of Treasury Stock transactions

Treasury Shares TOTAL Amount or Cost Additional Paid in Capital Retained Earnings
                    2,460 $78,720 [at $32] $78,720
                  (1,890) $68,040 [at $36] ($60,480) $7,560
                      (570) $10,260 [at $ 18] ($18,240) ($7,560) ($420)
                           -   $157,020 $0 $0 ($420)

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