(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 Property, plant, and equipment, net 859 Paid-in capital in excess of par 900 Treasury stock, 140 shares at cost 1,540 Accumulated othercomprehensive income (loss) (727)* Common stock, $2.25 par per share, 1,000 shares authorized, 280 shares issued $ 630 Retained earnings 2,260 Accounts receivable, net 1,200 Notes payable 1,188 *Debit balance ▶ Requirement 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?
| tock Holder’s Equity ( Thousands) | |
| Particular | Amount in $ |
| Common stock, $2.25 par, 1,000 shares | |
| authorized, 280 shares issued | 630 |
| Paid-in capital in excess of par | 900 |
| Retained earnings | 2260 |
| Treasury stock, common, 140 shares at cost | -1540 |
| Accumulated other comprehensive income (loss) | -727 |
| Total stockholders’ equity | 1523 |
Treasury Stock has a larger balance than the sum of Common Stock and Paid-in Capital in Excess of Par because Sagebrush Software paid a higher price to acquire treasury stock than the price Sagebrush received when it issued its stock.
