Treasury Stock The Stockholders Equity category of Bradford Companys balance sheet on January 1, 2010, appeared as

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Treasury Stock 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 benefi t from the treasury stock transaction? If so, where is the “gain” presented on the balance sheet?

AppendixLO1

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