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sam boyer acc 291 week 6.2 paid

sam boyer acc 291 week 6.2 paid - XACC/291 Week 6...

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XACC/291 – Week 6 Assignment Thank you for using ACCNerd.com Chen, Inc. purchases 1,000 shares of its own previously issued $5 per common stock for $12,000. Assuming the shares are held in the treasury, what effect does this transaction have on (a) net income, (b) total assets, (c) total paid-in capital, and (d) total stockholders’ equity? Chen, Inc’s treasure stock is resold for $15,000. What effect does this transaction have on (a) net income, (b) total assets, (c) total paid-in capital, and (d) total stockholders’ equity? Answer: At the time of purchase, treasury stock is debited and cash is credited at cost of $12,000.00. When a company holds treasury stock, a debit balance will exist in the general ledger account. Treasury stock is a
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Unformatted text preview: contra stockholders’ equity account and cash is an asset so this transacTon would result in the following: A. Has no eFect on net income B. Decreases total assets C. Has no eFect on total paid-in capital D. Decreases total stockholders’ equity. When treasury stock is re-sold at a price above original cost, cash is then debited for the amount of the proceeds ($15,000), ±reasury stock is credited at cost ($12,000), and the excess ($3,000) is credited to Paid-in Capital from treasury stock. Cash is an asset, and the other two accounts are part of stockholders’ equity. ±herefore, this transacTon: A. Has no eFect on net income B. Increases total assets C. Increases total paid-in capital D. Increases total stockholders’ equity....
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  • Spring '12
  • Rob
  • Accounting, Generally Accepted Accounting Principles, Total paid-in capital

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