The Stockholders Equity category of Bradford Companys balance sheet on January 1, 2010, appeared as follows: Common

Question:

The Stockholders’ Equity category of Bradford Company’s balance sheet on January 1, 2010, appeared as follows:

Common stock, $10 par, 10,000 shares issued and outstanding ......$100,000

Additional paid-in capital .......................... 50,000

Retained earnings ............................. 80,000

Total stockholders’ equity ........................$230,000

The following transactions occurred during 2010:

a. Reacquired 2,000 shares of common stock at $20 per share on July 1.

b. Reacquired 400 shares of common stock at $18 per share on August 1.

Required

1. Identify and analyze the effect of each transaction.

2. Assume that the company resold the shares of treasury stock at $28 per share on October 1. Did the company benefit from the treasury stock transaction? If so, where is the “gain” presented on the balance sheet?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...