Banff Water Inc. bottles and distributes spring water. On April 2 of the current year, Banff Water Inc. reacquired 30,000 shares of its common stock at $33 per share.
a. What is the balance of Treasury Stock on December 31 of the current year?
b. Where will the balance of Treasury Stock be reported on the balance sheet?
c. For what reasons might Banff Water Inc. have purchased the treasury stock?
d. Assume that on January 25 of the following year, Banff Water Inc. sold 20,000 shares of its treasury stock for $40 per share. Illustrate the effects on the accounts and financial statements of the sale of the treasury stock.