Homework Answers
First 4 questions are being answered here.
1.
a. The account used to record the difference when issue price exceeds par value of stock - Paid in capital in excess of par
b. The dollar amount assigned to each share of stock - Par value
c. The number o shares currently held by stockholders - Outstanding shares
d. A class of stock having first rights to dividends of a corporation - Preferred stock
e. The maximum number of shares a company can issue to shareholders - Authorized shares
f. The number of shares sold to stockholders - Issued shares
g. A class of stock that provides no preference rights to shareholders - Common stock
h. A financial institution that records and maintains records of another company's stockholders - Transfer agent.
2. Option (c) is correct
Outstanding shares = Issued shares - Treasury shares
Outstanding shares = $75000 - $3000 = $72000
3. Option (c) is correct
When the Treasury stock is purchased above the issue price, then excess paid is loss to the company. Here, issue price was $10 per share while these shares were purchased for $36 per share. So $26 per share is a loss to the company.
Total amount of shares purchased = $4000 * 10 = $40000
Total cash paid for purchase = 4000 * $36 = $144000
Loss = $144000 - $40000 = $104000
Required journal entry is:
Debit Treasury stock, common $40000
Debit Loss on treasury stock, common $104000
Credit Cash $144000
4. Option (d) is correct
Total contributed capital = Preferred stock + common stock + Additional paid in capital - preferred + Additional paid in capital - Common + Retained earnings
Total contributed capital = $60000 + $116000 + $14000 + $36000 + $80000
Total contributed capital = $306000
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