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10 6 questions 1 a company 39 s stock that it reacquires is termed treasury stock 2 4297412

 

10.6   Questions

1) A company's stock that it reacquires is termed treasury stock.

2) Treasury stock transactions are uncommon among larger corporations.

3) Treasury stock is a contra-equity account and carries a debit balance.

4) Treasury stock decreases the number of outstanding shares of stock.

5) Treasury stock is recorded at par value.

6) Treasury stock receives neither voting rights nor dividends.

7) Which of the following is NOT a reason for a company to purchase treasury stock?

A) To reward valued employees

B) To avoid a takeover by an outside company

C) To buy the stock at a high price to increase total stockholders' equity

D) To support the company's stock price

8) If a company resells treasury stock for less than it was acquired, how is the difference  between the original purchase price and the resell price recorded? First, you would:

A) debit Retained Earnings.

B) debit Paid-in capital–Treasury stock for the necessary amount, provided there is a sufficient credit in that account.

C) credit Paid-in capital–Treasury stock.

D) credit Retained Earnings.

9) Knutson Company reacquired 5,000 shares of its $15-par common stock for $13/share. The debit to Treasury Stock will be:

A) $10,000.

B) $65,000.

C) $75,000.

D) based on the last treasury stock transaction.

10) Knutson Company has 5,000 shares of treasury cost which it purchased for $13/share. It later resold 2,000 of those shares for $17/share. The amount to be credited to Paid-in Capital–Treasury Stock is:

A) $30,000.

B) $26,000.

C) $34,000.

D) $ 8,000.

11) Knutson Company has a $2,400 credit balance in Paid-In Capital–Treasury Stock. It sells 500 shares of treasury stock, which the company reacquired at $21/share, for $18/share. After the transaction, what will the balance be in the Paid-In Capital in Excess of Par–Treasury account?

A) $3,900 credit

B) $1,500 debit

C) $ 900 credit

D) $ 900 debit

12) Kentech, Inc. reacquired 10,000 shares of its $25-par common stock for $61/share. The debit to Treasury Stock will be:

A) based on the last treasury stock transaction.

B) $360,000.

C) $250,000.

D) $610,000.

13) Kentech, Inc. has 10,000 shares of treasury cost which it purchased for $61/share. It later resold 3,000 of those shares for $87/share. The amount to be credited to Paid-in Capital–Treasury Stock is:

A) $261,000.

B) $ 78,000.

C) $156,000.

D) $183,000.

14) Kentech, Inc. has a $11,800 credit balance in Paid-In Capital–Treasury Stock. It sells 1,000 shares of treasury stock, which the company reacquired at $58/share, for $52/share. After the transaction, what will the balance be in the Paid-In Capital in Excess of Par–Treasury account?

A) $ 5,800 credit

B) $ 6,000 debit

C) $17,800 credit

D) $11,800 credit

 

 

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