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Unformatted text preview: Problems on Module 5-SE2 by Alfredo Garcia January 26, 2005 c1.When treasury stock is purchased for more than its par value, Treasury Stock is debited for the purchase price under which of the following methods? Cost Method Par Value Method a. No No b. No Yes c. Yes No d. Yes Yes d2.When treasury stock is purchased for cash at more than its par value, what is the effect on total stockholders' equity under each of the following methods? Cost Method Par Value Method a. No effect Decrease b. Decrease No effect c. Increase Increase d. Decrease Decrease c3.Treasury stock was acquired for cash at a price in excess of its par value. The treasury stock was subsequently reissued for cash at a price in excess of its acquisition price. Assuming that the cost method of accounting for treasury stock transactions is used, what is the effect on retained earnings? Acquisition of Reissuance of Treasury Stock Treasury Stock a. No effect Increase b. Increase No effect c. No effect No effect d. Increase Decrease d4.Five thousand shares of common stock with a par value of $10 per share were issued initially at $12 per share. Subsequently, 1,000 of these shares were acquired as treasury stock at $15 per share. Assuming that the par value method of accounting for treasury stock transactions is used, what is the effect of the acquisition of the treasury stock on each of the following? Additional Retained Paid-In Capital Earnings a. Increase No effect b. Increase Decrease c. Decrease Increase d. Decrease Decrease b5.Which of the following is issued to shareholders by a corporation as evidence of the ownership of rights to acquire its unissued or treasury stock? a. Stock options b. Stock rights c. Stock dividends d. Stock subscriptions d6.A company issued rights to its existing shareholders to purchase, for $30 per share, unissued shares of $15 par value common stock. When the rights lapse, a. Additional Paid-In Capital will be credited. b. Stock Rights Outstanding will be debited. c. Gain on Lapse of Stock Rights will be credited. d. no entry will be made. b7.Select the statement that is incorrect concerning the appropriations of retained earnings. a. Appropriations of retained earnings do not change the total amount of stockholders' equity. b. Appropriations of retained earnings reflect funds set aside for a designated purpose, such as plant expansion. c. Appropriations of retained earnings can be made as a result of contractual requirements. d. Appropriations of retained earnings can be made at the discretion of the board of directors. d8.When a property dividend is declared and the book value of the property exceeds its market value, the dividend is recorded at the a. market value of the property at the date of distribution....
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This note was uploaded on 02/20/2012 for the course ECON 222 taught by Professor Enclair during the Spring '12 term at Guilford Tech.
- Spring '12