Carbide Corporation purchased 36,000 shares of its own stock for $47 per share.
ID: 2772825 • Letter: C
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