Refer to the following information for Tolan Corporation: bullet Common Stock, $1.00 par, 106,000 shares issued, 100,000 shares outstanding bullet Paid-In Capital in Excess of Parlong dash Common: $2,190,000 bullet Retained Earnings: $920,000 bullet Treasury Stock: 6,000 shares purchased at $21 per share If Tolan resold 2,500 shares of treasury stock for $22.50 per share, which of the following statements would be true?

A

The Treasury Stock account would decrease by $52,500.

B.

The Retained Earnings account would increase by $56,250.

C. The Paid-In Capital in Excess of

Parlong dash-Common

account would increase by $2,500.

D.

The Treasury Stock account would decrease by $26,250.

Question

Jenny Roberson

Business

10 May, 16:55

Refer to the following information for Tolan Corporation: bullet Common Stock, $1.00 par, 106,000 shares issued, 100,000 shares outstanding bullet Paid-In Capital in Excess of Parlong dash Common: $2,190,000 bullet Retained Earnings: $920,000 bullet Treasury Stock: 6,000 shares purchased at $21 per share If Tolan resold 2,500 shares of treasury stock for $22.50 per share, which of the following statements would be true?

A

The Treasury Stock account would decrease by $52,500.

B.

The Retained Earnings account would increase by $56,250.

C. The Paid-In Capital in Excess of

Parlong dash-Common

account would increase by $2,500.

D.

The Treasury Stock account would decrease by $26,250.

+2

Answers (1)

Know the Answer?

Zaire Estes · Answer 1

Option (A) is correct.

Explanation:

Journal entry at time of selling treasury stock:

Cash A/c Dr. $56,250

To Treasury stock $52,500

To Paid in capital in excess of par $3,750

Workings:

cash = 2,500 * 22.5

= $56,250

Treasury stock = 2,500 * $21

= $52,500

Paid in capital in excess of par = 2,500 * $1.5

= $3,750

Therefore, this will conclude that

Treasury stock will decrease by $52,500.