Can anyone provide a clearer answer explanation? My understanding of the topic is obviously skewed; how is the $24k arrived at?

Scurry Company has 500,000 shares of $8 par common stock issued and outstanding as of January 1, 2015, originally issued for $14 per share. During 2015, Scurry Company had the following transactions involving its own stock:



On March 6, acquired 12,000 shares of treasury stock at a cost of $12 per share
On April 18, resold 4,000 shares of treasury stock at $15 per share.
On June 11, resold an additional 2,000 shares of treasury stock at $18 per share


If Scurry uses the par value method of accounting for treasury stock, what will be the balance in additional paid in capital from treasury stock as a result of these transactions?


A.
$0 [12%]

B.
$12,000 [6%]

C.
$72,000 [16%]

D.
$24,000 [65%]

Choice D (Correct) and Choices A, C (Incorrect): Under the par value method, the acquisition of treasury stock will result in an increase (debit) to treasury stock for the par, 12,000 x $8 or $96,000, and a decrease (debit) to paid in capital from common stock for the amount associated with the original issuance, 12,000 x $6 or $72,000. There is a reduction to cash for the cost of $144,000. A credit of $24,000 is required to balance the entry, which will be recorded in additional paid in capital from treasury stock. Under the par value method, when treasury shares are resold, treasury stock is reduced by the par value and any excess is recorded in additional paid in capital from common stock, similarly to when shares are issued originally. As a result, the resale at $15 per share will result in an increase to paid in capital from common stock by $7 per share on 4,000 share or $28,000, and the resale at $18 per share will increase paid in capital from common stock by $10 per share on 2,000 shares or $20,000. Additional paid in capital from treasury stock, however, remains at $24,000.

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