Question 1

Treasury stock is recorded at cost,without reference to par value.

Accepted Answer

Treasury stock is recorded at cost, which may or may not be the same as its par value. Therefore, its recording is not based on par value.

Question 2

Define treasury stock and provide two reasons why a corporation would purchase treasury stock.

Accepted Answer

The answer of Define treasury stock and provide two reasons...

Question 3

The purchase of treasury stock ________.

Accepted Answer

The purchase of treasury stock reduces the amount of outstanding shares, which means there are fewer shares of stock outstanding. This reduces both assets and stockholders' equity.

Question 4

Refer to the following information for Tangent Corporation:
• Common Stock,$1.00 par,114,000 shares issued,98,000 shares outstanding
• Paid-In Capital in Excess of Par-Common: $2,150,000
• Retained Earnings: $930,000
• Treasury Stock: 10,000 shares purchased at $35 per share
If Tangent resold 1,300 shares of treasury stock for $22.50 per share,which of the following statements would be true?

Accepted Answer

C)1,300 × $35 = $45,500

Question 5

Micro Electronics completed the following stock issuance transactions:
  
Prepare the journal entries to record these transactions.Explanations are not required.

Accepted Answer

The answer of Micro Electronics completed the following stock issuance...

Question 6

The journal entry for the purchase of treasury stock includes a credit to Cash.

Accepted Answer

When a company purchases treasury stock, it uses cash to buy back its own shares, therefore the journal entry will include a credit to Cash account.

Question 7

Assume the following information for Petra Sales,Inc.:
• Common Stock,$1.00 par,202,000 shares issued,180,000 shares outstanding
• Paid-In Capital in Excess of Par-Common: $1,690,000
• Retained Earnings: $2,490,000
• Treasury Stock: 30,000 shares purchased at $13 per share
If Petra Sales purchases an additional 7,000 shares of treasury stock at $15 per share,what number of shares will be shown as issued and outstanding?

Accepted Answer

C)Total no.of shares outstanding = 180,000 - 7,000 = 173,000 shares

Question 8

Ross Corporation reported the following:

Which of the following is included in the entry to record the corporation's purchase of 40,000 shares of its common stock for $14.00 per share?

Accepted Answer

A)Total amount debited to Treasury Stock - Common = No.of shares × purchase price per share = 40,000 × $14.00 = $560,000

Question 9

Peterson,Inc.issued 4,000 shares of preferred stock for $240,000.The stock has a par value of $60 per share.Prepare the journal entry for this transaction.

Accepted Answer

The answer of Peterson,Inc.issued 4,000 shares of preferred stock for...

Question 10

Treasury stock is a contra equity account.

Accepted Answer

Treasury stock is recorded as a reduction in total shareholders' equity, making it a contra equity account.

Question 11

A corporation originally issued $9 par value common stock for $14 per share.It purchased the stock for $15 per share.Which of the following is included in the entry to record the sale of 60 shares of treasury stock for $19 per share?

Accepted Answer

B)
 11ea8a42_4f5a_8b39_8b44_17fda4ebd56b_TB5024_00

Question 12

If treasury stock is resold for more than cost,the difference is debited to the account Paid-In Capital from Treasury Stock Transactions.

Accepted Answer

If treasury stock is resold for more than cost,the difference is credited to the account Paid-In Capital from Treasury Stock Transactions.

Question 13

Rimsone,Inc.purchases 8,500 shares of the company's own $6 par common stock for $8 per share.Journalize the transaction.

Accepted Answer

The answer of Rimsone,Inc.purchases 8,500 shares of the company's own...

Question 14

The account Paid-In Capital from Treasury Stock Transactions has a credit balance of $2,100.The corporation resells 750 shares of its treasury stock.These shares were acquired for $11 per share and sold for $9 per share.The entry to record the sale of treasury stock includes a debit to Retained Earnings of $1,500.

Accepted Answer

The answer of The account Paid-In Capital from Treasury Stock...

Question 15

If treasury shares are sold for less than their cost,the difference is recorded as a loss.

Accepted Answer

If treasury shares are sold for less than their cost,the difference is first debited to Paid-In Capital from Treasury Stock Transactions and then to Retained Earnings if the balance in Paid-In Capital from Treasury Stock Transactions is too small.

Question 16

Treasury stock ________.

Accepted Answer

Treasury stock represents shares of a company's own stock that has been repurchased from the market. These repurchased shares are no longer outstanding, so they decrease the number of shares outstanding. Therefore, the correct choice is D.

Question 17

Ropers,Inc.purchases 11,000 shares of its previously issued $2 par value common stock for $160 per share.Which of the following is the correct journal entry to record this transaction?

Accepted Answer

D)11,000 × $160 = $1,760,000

Question 18

A corporation originally issued $7 par value common stock for $15 per share.Which of the following is included in the entry to record the purchase of 300 shares of treasury stock for $12 per share?

Accepted Answer

A)Total amount debited to Treasury Stock-Common = No.of shares × purchase price per share = 11ea8a42_4f5a_6426_8b44_07cc9162381d_TB5024_00

Question 19

Treasury stock is ________.

Accepted Answer

Treasury stock is a contra equity account, which means it reduces the total equity of a company. It is created when a company buys back its own stock from shareholders, and the stock is held as treasury stock on the balance sheet.

Question 20

Orange Office Supply Corporation completed the following stock issuance transactions:
  
Prepare the journal entries to record these transactions.Explanations are not required.

Accepted Answer

The answer of Orange Office Supply Corporation completed the following...

Quiz 13: Corporations