Question

Roberto Designers was organized on January 1, 2021. The firm was authorized to issue 100,000 shares of $5 par value common stock. During 2021, Roberto had the following transactions relating to stockholders equity:
Issued 10,000 shares of common stock at $7 per share.
Issued 20,000 shares of common stock at $8 per share.
Reported a net income of $100,000.
Paid dividends of $50,000.
Purchased 3,000 shares of treasury stock at S10 (part of the 20,000 shares issued at $3)
What is the balance in the Treasury Stock account at the end of 2021?
a) $160,000.
b) $30,000
c) $260,000.
d) $250,000.

Answer 1

Answer:

Option (b) $30,000

Explanation:

Data provided in the question:

shares of common stock issued @ $7 per share = 10,000

shares of common stock issued @ $8 per share = 20,000

Net income = $100,000

Dividend paid = $50,000

Number of treasury stocks purchased = 3,000

Price per stock of treasury stocks = $10

Now,

The balance in the Treasury Stock account at the end of 2021

= Number of treasury stocks purchased × Price per stock of treasury stocks

= 3,000 × $10

= $30,000

Hence,

Option (b) $30,000