E 1 0- 3 9B (L earn i ng Obj ec tiv es 3 , 6: S ho w ho w t reas u ry s t oc k a ff ec t s a co mp a

E10-39B (Learning Objectives 3, 6: Show how treasury stock affects a company; prepare the stockholders’ equity section of a balance sheet) Sagebrush Software had the following selected account balances at December 31, 2012 (in thousands, except par value per share):

 

 

 

 

 

Inventory………………………………….

$   652

Common stock, $2.25 par

Property, plant, and

 

per share, 1,000 shares

equipment, net ………………………

859

authorized, 280 shares

Paid-in capital in excess of par …….

900

issued …………………………

$   630

Treasury stock,

 

Retained earnings…………….

2,260

140  shares  at cost…………………..

1,540

Accounts receivable, net ……

1,200 Accumulated other

comprehensive income (loss) …..  

(727)*

Notes payable …………………

1,188

 

 

 

 

 

*Debit balance

 

▶ Requirements

1.    Prepare the stockholders’ equity section of Sagebrush Software’s balance sheet (in thousands).

2.    How can Sagebrush have a larger balance of treasury stock than the sum of Common Stock

and Paid-in Capital in Excess of Par?