Question 1

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

Accepted Answer

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

Question 2

Retired shares of treasury stock may later be reissued.

Accepted Answer

Retired shares of treasury stock are permanently canceled and cannot be reissued. They are removed from the pool of issued shares.

Question 3

Dividends can be paid in the form of cash,stock,or other property.

Accepted Answer

Dividends can be paid in various forms including cash, stock, or other property depending on the company's policies and the terms of the investment contract.

Question 4

The account Paid-In Capital from Treasury Stock Transactions has a credit balance of $2,000.The corporation resells 450 shares of its treasury stock.These shares were acquired for $10 per share and sold for $3 per share.The entry to record the sale of treasury stock includes a debit to Retained Earnings of $3,150.

Accepted Answer

The entry to record the sale of treasury stock should include a debit to Cash for $1,350 (450 shares x $3 per share), a credit to Treasury Stock for $4,500 (450 shares x $10 per share), and a credit to Paid-In Capital from Treasury Stock Transactions for any difference between the cost and selling price of the shares, which in this case is $1,650 ($4,500 - $2,850). There should not be a debit to Retained Earnings.

Question 5

Cash dividends cause a decrease in both assets and stockholders' equity of the corporation.

Accepted Answer

When a corporation declares and pays cash dividends, the money is paid out to the shareholders, resulting in a decrease in the corporation's assets (cash) and a decrease in stockholders' equity.

Question 6

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 7

Which of the following is TRUE of dividends?

Accepted Answer

Dividends are a distribution of cash, stock, or other property to stockholders. They do not increase assets or decrease total stockholders' equity of a corporation, and they do not decrease paid-in capital. However, dividend payments do reduce retained earnings, which is a component of stockholders' equity.

Question 8

Foodmart,Inc.completed the following treasury stock transactions in 2018:
  (Assume the balance in Paid-In Capital from Treasury Stock Transactions on March 24 is $ 1,200. )
Journalize these transactions.Explanations are not required.
How will Foodmart,Inc.report treasury stock on its balance sheet as of December 31,2018?

Accepted Answer

The answer of Foodmart,Inc.completed the following treasury stock transactions in...

Question 9

Marketsite,Inc.completed the following treasury stock transactions in 2018:
  Journalize these transactions.Explanations are not required.
How will Marketsite,Inc.report treasury stock on its balance sheet as of December 31,2018?

Accepted Answer

The answer of Marketsite,Inc.completed the following treasury stock transactions in...

Question 10

When a corporation retires its shares of treasury stock,the stock certificates are canceled.

Accepted Answer

When a corporation retires its shares of treasury stock, the stock certificates are canceled and the number of authorized shares is reduced by the number of shares retired.

Question 11

A profitable corporation may make distributions to stockholders in the form of bonuses.

Accepted Answer

A profitable corporation may make distributions to stockholders in the form of dividends.

Question 12

Land 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 $12.00 per share?

Accepted Answer

Total amount debited to Treasury Stock - Common = No.of shares × purchase price per share = 40,000 × $12.00 = $480,000

Question 13

A corporation originally issued $7 par value common stock for $13 per share.It purchased the stock for $17 per share.Which of the following is included in the entry to record the sale of 20 shares of treasury stock for $18 per share?

Accepted Answer

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Question 14

Corporations may not retire preferred stock in order to avoid paying the preferred dividends.

Accepted Answer

Corporations can retire preferred stock, which means buying it back from shareholders, as a way to stop paying dividends on that stock. This action is subject to the terms outlined in the stock's issuing agreement.

Question 15

Rosiland,Inc.purchases 16,000 shares of its previously issued $2 par value common stock for $460 per share.Which of the following is the correct journal entry to record this transaction?

Accepted Answer

16,000 × $460 = $7,360,000

Question 16

A sale of treasury stock at its cost increases assets and increases equity.

Accepted Answer

The answer of A sale of treasury stock at its...

Question 17

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 18

If a company retires preferred stock,________.

Accepted Answer

Retiring preferred stock means that the company is redeeming the stock and paying off the shareholders. As a result, the company's total stockholders' equity will decrease, since the company is reducing its liability to those preferred stockholders.

Question 19

Refer to the following information for Tolan Corporation: • Common Stock,$1.00 par,106,000 shares issued,100,000 shares outstanding
• Paid-In Capital in Excess of Par-Common: $2,190,000
• Retained Earnings: $920,000
• Treasury Stock: 6000 shares purchased at $21 per share
If Tolan resold 2500 shares of treasury stock for $22.50 per share,which of the following statements would be TRUE?

Accepted Answer

2500 × $21 = $52,500

Question 20

On March 31,2018,Water Front,Inc.shows the following data on its balance sheet:  Assume that Water Front sells 1500 shares of treasury stock at $33 per share.What is total stockholders' equity after this transaction?

Accepted Answer

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Quiz 13: Corporations