Cornerstones of Financial Accounting
4th Edition
ISBN: 9781337690881
Author: Jay Rich, Jeff Jones
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 10, Problem 12MCQ
To determine
Concept introduction:
Treasury stock is the shares bought back by the company itself. A company may purchase its own shares and the shares bought back are called treasury stock. The
- For Purchase of treasury stock:
Treasury stock account is debited and cash account is credited with the cost of treasury stock purchased.
- For Sale / Reissuance of treasury stock:
Cash account is debited for the amount received on sale of treasury stock and the Treasury stock account is credited with the cost of treasury stock. For the difference in cost and sale value, Additional Paid in Capital and
Retained earnings accounts are adjusted.
To choose:
The correct treatment of the difference.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
When a company buys shares of its own stock to be held in treasury, it records a reduction in: B . both assets and shareholders’ equity.
A company sells treasury stock at less than its acquisition price. No previous sales of treasury stock
have occurred. What effect will the sale have on Retained Earnings and earnings per share,
respectively?
Select one:
O a. Decrease and no effect
O b. Increase and no effect
O c. Decrease and increase
O d. Increase and decrease
e. Decrease and decrease
Under the par value method, the balance in the Treasury Stock account for a company's common
stock is
equal to the average amount of paid in capital of the company's outstanding shares
O reported as a reduction of the balance of the common stock account
reported as a reduction of total stockholders' equity
O equal to the cost to reacquire the treasury shares.
Chapter 10 Solutions
Cornerstones of Financial Accounting
Ch. 10 - Prob. 1DQCh. 10 - 2. What does a share of stock represent?Ch. 10 - Prob. 3DQCh. 10 - Prob. 4DQCh. 10 - Prob. 5DQCh. 10 - Prob. 6DQCh. 10 - Prob. 7DQCh. 10 - Prob. 8DQCh. 10 - Prob. 9DQCh. 10 - Prob. 10DQ
Ch. 10 - 11. Describe how cumulative preferred stock...Ch. 10 - Prob. 12DQCh. 10 - 13. What balance sheet accounts are affected by...Ch. 10 - 14. What is the difference between par value and...Ch. 10 - Prob. 15DQCh. 10 - Prob. 16DQCh. 10 - Prob. 17DQCh. 10 - Prob. 18DQCh. 10 - Prob. 19DQCh. 10 - Prob. 20DQCh. 10 - Prob. 21DQCh. 10 - Prob. 22DQCh. 10 - Prob. 23DQCh. 10 - Prob. 24DQCh. 10 - Prob. 25DQCh. 10 - Prob. 26DQCh. 10 - Prob. 27DQCh. 10 - Prob. 28DQCh. 10 - Prob. 29DQCh. 10 - Prob. 30DQCh. 10 - Prob. 31DQCh. 10 - Prob. 32DQCh. 10 - Prob. 33DQCh. 10 - Prob. 34DQCh. 10 - Which of the following is not a component of...Ch. 10 - Which of the following statements is true? The...Ch. 10 - Authorized stock represents the: number of shares...Ch. 10 - Prob. 4MCQCh. 10 - Prob. 5MCQCh. 10 - Ames Corporation repurchases 10,000 shares of its...Ch. 10 - With regard to preferred stock, its stockholders...Ch. 10 - Prob. 8MCQCh. 10 - Prob. 9MCQCh. 10 - A company would repurchase its own stock for all...Ch. 10 - Prob. 11MCQCh. 10 - Prob. 12MCQCh. 10 - Prob. 13MCQCh. 10 - Prob. 14MCQCh. 10 - When a company declares a cash dividend, which of...Ch. 10 - Prob. 16MCQCh. 10 - Prob. 17MCQCh. 10 - The balance of the $2.50 par value Common Stock...Ch. 10 - When a company declares a 3-for-l stock split, the...Ch. 10 - Shea Company has 100,000 shares of 6%, S50 par...Ch. 10 - RVR Enterprises shows net income of $1 00,000 for...Ch. 10 - Comprehensive income: includes transactions that...Ch. 10 - Prob. 23MCQCh. 10 - Prob. 24MCQCh. 10 - Prob. 25CECh. 10 - Recording the Sale of Common Stock Plymouth...Ch. 10 - Calculating the Number of Shares Issued Castalia...Ch. 10 - Prob. 28CECh. 10 - Prob. 29CECh. 10 - Prob. 30CECh. 10 - Prob. 31CECh. 10 - Cash Dividends King Tut Corporation issued 19,000...Ch. 10 - Prob. 33CECh. 10 - Prob. 34CECh. 10 - Preferred and Common Stock Dividends Barstow...Ch. 10 - Preferred Stock Dividends Seashell Corporation has...Ch. 10 - Stockholder Profitability Ratios The following...Ch. 10 - Stockholder Payout Ratios The following...Ch. 10 - Prob. 39BECh. 10 - Recording the Sale of Common and Preferred Stock...Ch. 10 - Prob. 41BECh. 10 - Calculating the Number of Shares Issued Castanet...Ch. 10 - Prob. 43BECh. 10 - Accounting for Treasury Stock Paris Corporation...Ch. 10 - Treasury Stock Refer to the information for...Ch. 10 - Prob. 46BECh. 10 - Cash Dividends Cyprus Corporation issued 12,000...Ch. 10 - Prob. 48BECh. 10 - Augusta Corporation reported the following...Ch. 10 - Preferred and Common Stock Dividends Brookshed...Ch. 10 - Prob. 51BECh. 10 - Prob. 52BECh. 10 - Prob. 53BECh. 10 - Stockholder Payout Rations Super Duper Corporation...Ch. 10 - Prob. 55BECh. 10 - Prob. 56ECh. 10 - Outstanding Stock Lars Corporation shows the...Ch. 10 - Capital Stock Refer to the information for Stahl...Ch. 10 - Preparation of Stockholders Equity Section Refer...Ch. 10 - Issuing Common Stock Carmean Products Inc. sold...Ch. 10 - Issuing and Repurchasing Stock Mohawk Company had...Ch. 10 - Prepare the Stockholders' Equity Section Renee...Ch. 10 - Prepare the Stockholders' Equity Section Wildcat...Ch. 10 - Prob. 64ECh. 10 - Treasury Stock Transactions Garrett Inc. had no...Ch. 10 - Cash Dividends on Common Stock Berkwild Company is...Ch. 10 - Cash Dividends on Common and Preferred Stock Lemon...Ch. 10 - Prob. 68ECh. 10 -
Stock Dividends
Crystal Corporation has the...Ch. 10 - Stock Dividend The balance sheet of Cohen...Ch. 10 - Prob. 71ECh. 10 - Stock Dividends and Stock Splits The balance sheet...Ch. 10 - Preferred Dividends Eastern Inc.s equity includes...Ch. 10 - Cumulative Preferred Dividends Capital stock of...Ch. 10 - Retained Earnings Tigress Manufacturing had...Ch. 10 - Prob. 76ECh. 10 - Prob. 77ECh. 10 - Ratio Analysis Consider the following information....Ch. 10 - Ratio Analysis MJO Inc. has the following...Ch. 10 - Stockholders' Equity Terminology A list of terms...Ch. 10 - Prob. 81PSACh. 10 - Prob. 82PSACh. 10 - Treasury Stock Transactions Hansen Inc. engaged in...Ch. 10 - Statement of Stockholders' Equity At the end of...Ch. 10 - Common Dividends Fusion Payroll Service began 2019...Ch. 10 - Problem 10-86A Stock Dividends and Stock Splits...Ch. 10 - Prob. 87PSACh. 10 - Ratio Analysis Consider the following information...Ch. 10 - Prob. 81PSBCh. 10 - Prob. 82PSBCh. 10 - Treasury Stock Transactions Bentonite Adhesives...Ch. 10 - Statement of Stockholders' Equity At the end of...Ch. 10 - Common Dividends Thompson Payroll Service began in...Ch. 10 - Prob. 86PSBCh. 10 - Prob. 87PSBCh. 10 - Prob. 88PSBCh. 10 - Prob. 89.1CCh. 10 - Prob. 89.2CCh. 10 - Prob. 90.1CCh. 10 - Prob. 90.2CCh. 10 - Prob. 91CCh. 10 - Prob. 92.1CCh. 10 - Prob. 92.2CCh. 10 - Prob. 92.3CCh. 10 - Prob. 92.4CCh. 10 - Prob. 92.5CCh. 10 - Prob. 93.1CCh. 10 - Prob. 93.2CCh. 10 - Prob. 93.3CCh. 10 - Prob. 93.4CCh. 10 - Prob. 93.5CCh. 10 - Prob. 93.6CCh. 10 - Prob. 94.1CCh. 10 - Prob. 94.2CCh. 10 - Prob. 94.3CCh. 10 - Prob. 94.4CCh. 10 - Prob. 94.5CCh. 10 - Prob. 94.6CCh. 10 - Prob. 95.1CCh. 10 - Prob. 95.2C
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- When treasury shares are resold at a price above cost: a. Paid-in capital is reduced. b. Paid-in capital is increased.c. Retained earnings is always increased.d. A gain is reported in the income statementarrow_forwardWhen a company buys shares of its own stock to be held in treasury, it records a reduction in: C . assets and an increase in shareholders’ equity.arrow_forward1. Treasury stock is presented on the balance sheet as an asset. a liability. a reduction to equity. a memorandum in the notes. 2. Under the cost method, when the corporation reacquires its capital stock, it assumes it will reissue rather than retire the stock. debits Treasury Stock for the price paid. credits Cash for the price paid. does all of these choicesarrow_forward
- A company issues stock dividends for several reasons: Select one: a. To reward investors b. To reduce the market price per share of its stock O c. All the options O d. To continue dividends but conserve casharrow_forwardWhen treasury stock accounted for by the cost method is subsequently sold for more than its purchase price, the excess of the cash proceeds over the carrying value of the treasury stock should be recognized as: a.an increase in retained earnings b.income from continuing operations c.an ordinary gain d.an increase in additional paid-in capitalarrow_forwardWhich of the following statements about dividends is TRUE? A.Dividends are typically set between P20 and P30 per shareB.Dividends cannot legally be reinvested in the same company where they were earnedC.Dividends are usually paid quarterly by well established publicly traded companiesD.Dividends are earned when you sell your shares for a higher price than when you bought themarrow_forward
- If a company resells treasury stock at a loss, and that amount exceeds any balance in the treasury stock APIC account, the remaining loss is debited to: Group of answer choices Additional Paid in Capital (APIC) -Common Stock Treasury stock cannot be sold at a loss Retained earnings Loss on sale of treasury stockarrow_forwardWhich of the following is true if an IFRS company has a profit of $100,000? The profit will be shown on a statement of retained earnings, but not on a statement of changes in shareholders' equity. O The profit will be shown on both a statement of retained earnings and a statement of changes in shareholders' equity. O The profit will not be shown on a statement of retained earnings or on a statement of changes in shareholders' equity. O The profit will not be shown on a statement of retained earnings, but will be shown on a statement of changes in shareholders' equity. Save for Later Submit Answerarrow_forwardWhen a stock dividend is declared and issued: Multiple Cholce total stockholders' equity does not change. total paid-in capital does not change. retained earnings is normally decreased by the par value of the shares issued in the dividend. total pald-in capital is decreased by the market value of the shares issued in the dividend.arrow_forward
- Return on equity (ROE) is measured by Profit/ Average total equity Assume ROE is less than 100% and that the cash balance remains positive. State the effect the following event occurring on the reporting date would have on this ratio. EVENT: A payment to buy back a portion of shares from investors ✓ [Select] Decrease Increase No changearrow_forwardThe entry to record the issuance of common stock at a price above its par value includes a A) an increase to cash. B) an increase to a liability account for the difference between the price paid by the stockholders and the par value of stock. C) an increase to additional paid-in capital: common stock D) a decrease to common stockarrow_forwardWhat is the effect of purchasing treasury stock on a company’s earnings per share and return on equity, respectively? (Enter 1, 2, 3, or 4 that represents the correct answer.) No effect and no effect Decrease and decrease Increase and increase Increase and decreasearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningEBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Stockholders Equity: How to Calculate?; Author: Accounting University;https://www.youtube.com/watch?v=2jZk1T5GIlw;License: Standard Youtube License