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At December 31, 2010, the Book Value Per Share of Common

Question 164

Matching

At December 31, 2010, the book value per share of common stock of Big Time Corporation amounted to $21 per share. Match each items on the book value per share of common stock computation with the effect assuming each item occurs after December 31, 2010. Consider each item independently of the other items listed.

Premises:

Responses:

Sale of newly issued shares of common stock at $23 per share

I = increase

Purchase of treasury stock for $16 per share

D = decrease

Declaration of current cash dividends on preferred stock

NE = no effect

Declaration and distribution of stock dividends on common stock

Sale of treasury stock (purchased at $16 per share) for $19 per share

Entry to close net income for the period to the Retained Earnings account

Dividends in arrears on preferred stock

Purchase of a truck with cash

Payment of a previously declared and recorded cash dividend on common stock

Premises:

Sale of newly issued shares of common stock at $23 per share

Purchase of treasury stock for $16 per share

Declaration of current cash dividends on preferred stock

Declaration and distribution of stock dividends on common stock

Sale of treasury stock (purchased at $16 per share) for $19 per share

Entry to close net income for the period to the Retained Earnings account

Dividends in arrears on preferred stock

Purchase of a truck with cash

Payment of a previously declared and recorded cash dividend on common stock

Responses:

I = increase

D = decrease

NE = no effect

Correct Answer:

Premises:

Responses:

Sale of newly issued shares of common stock at $23 per share

Purchase of treasury stock for $16 per share

Declaration of current cash dividends on preferred stock

Declaration and distribution of stock dividends on common stock

Sale of treasury stock (purchased at $16 per share) for $19 per share

Entry to close net income for the period to the Retained Earnings account

Dividends in arrears on preferred stock

Purchase of a truck with cash

Payment of a previously declared and recorded cash dividend on common stock

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