[Anonymous]

For the following question, my answer is 1,500. I dont know why the answer is 500. please help me with the J/Es and tell me why it’s 500!!

THANK YOU!

Kuchman Kookware issued 40,000 shares of its $8.00 par value common stock for $9 on January 1, Year 1. Kuchman repurchased 1,000 shares at $8 per share on April 1, Year 2, resold 500 shares at $9 per share on July 1, Year 2, and, on October 1, Year 2, resold the final 500 shares at $5 per share. Assuming Kuchman uses the par value method of accounting for its treasury stock, retained earnings at December 31. Year 2 would be reduced by:

a.

$1,500

b.

$1,000

c.

$0

d.

$500

[Anonymous]

I got 1,500 as well. Interesting, did they count APIC-TS when credited as RE? I don't get it.

[LKD CPA]

I had issues with this one too when I was studying for FAR. Here is a link: https://www.another71.com/cpa-exam-forum/topic/can-someone-please-explain-this-par-value-method-for-treasury-stock

FAR: 74, 83
REG: 76
BEC: 77
AUD: 89

[Anonymous]

Thank you!!!!!

[Author]

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