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The treasury stock purchased in question 13 is resold by Chen, Inc. for $15,000. What effect does this transaction have

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The treasury stock purchased in question 13 is resold by Chen, Inc. for $15,000. What effect does this transaction have on
(a) Net income,
(b) Total assets,
(c) Total paid-in capital, and
(d) Total stockholders’ equity?

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When treasury stock is resold at a price above original cost Cash is debited for the amount …View the full answer


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Financial Accounting

Financial Accounting

ISBN: 978-0470507018

7th Edition

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso

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Question Posted: May 22, 2012 01:00:26
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Treasury stock refers to shares of a company\'s own stock that the company has bought back from its shareholders and now holds as a form of asset on its balance sheet. When a company buys back its own stock, it reduces the number of outstanding shares in the market, which can potentially increase the value of the remaining shares. Treasury stock can be acquired through a variety of methods, such as open market purchases, negotiated transactions, or as a result of converting convertible securities. Companies may buy back their own shares for a number of reasons, including to return capital to shareholders, to signal confidence in the company\'s future, or to use the shares for employee stock option plans. While treasury stock does not pay dividends, it can be reissued by the company at a later time, which could dilute the value of the remaining shares. Companies are required to report their treasury stock holdings in their financial statements.

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