Vaughn Manufacturing started business in 2012 by issuing 209000 shares of $21 par common stock for $28 each. In 2017, 25500 of these shares were purchased for $40 per share by Vaughn Manufacturing and held as treasury stock. On June 15, 2018, these 25500 shares were exchanged for a piece of property that had an assessed value of $753000. Vaughn's stock is actively traded and had a market price of $46 on June 15, 2018. The cost method is used to account for treasury stock. The amount of paid-in capital from treasury stock transactions resulting from the above events would beA. $153000. B. $743000. C. $453000. D. $218000.

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Business

Tyrese Spence

27 August, 16:57

Vaughn Manufacturing started business in 2012 by issuing 209000 shares of $21 par common stock for $28 each. In 2017, 25500 of these shares were purchased for $40 per share by Vaughn Manufacturing and held as treasury stock. On June 15, 2018, these 25500 shares were exchanged for a piece of property that had an assessed value of $753000. Vaughn's stock is actively traded and had a market price of $46 on June 15, 2018. The cost method is used to account for treasury stock. The amount of paid-in capital from treasury stock transactions resulting from the above events would beA. $153000. B. $743000. C. $453000. D. $218000.

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Answers (1)

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Harper Briggs · Answer 1

A. $153,000

Explanation:

The Journal Entry is shown below:-

Property Dr, $1,173,000

To Treasure stock $1,020,000

To additional paid-in-capital $153,000

The computation is given below:-

For Property

= 25,500 * $46

= $1,173,000

For Treasure stock

= 25,500 * $40

= $1,020,000

For Additional paid-in-capital

= $1,173,000 - $1,020,000

= $153,000