Question

Trent Corporation was organized on January 1, 2015, with an authorization of 1,200,000 shares of common stock with a par value of $6 per share. During 2015, the corporation had the following capital transactions: Trent used the cost method to record the purchase and reissuance of the treasury shares. What is the total amount of additional paid-in capital as of December 31, 2015

Answer 1

Answer:

$2,960,000

Explanation:

January 5: issued 600,000 shares at $10 per share

July 28: purchased 80,000 shares at $11 per share  

December 31 : sold the 80,000 shares held in treasury at $18 per share

January 5, 2015, 600,000 stocks are issued

Dr Cash 6,000,000

    Cr Common stock 3,600,000

    Cr Additional paid in capital 2,400,000

July 28, 2015, 80,000 stocks are repurchased

Dr Treasury stock 880,000

    Cr Cash 880,000

December 31, resold 80,000 treasury stocks

Dr Cash 1,440,000

    Cr Treasury stock 880,000

    Cr Additional paid in capital 560,000

Additional paid in capital account balance = $2,400,000 + $560,000 = $2,960,000