4. Glaser Company paid $36,000 to buy 3,000 shares of its $5 par value common stock...
4. Glaser Company paid $36,000 to buy 3,000 shares of its $5 par value common stock for the treasury. The stock was originally sold for $27,000. The entry to record the purchase includes a a. debit to Treasury Stock for $27,000.
b. credit to Treasury Stock for $15,000.
c. debit to Treasury Stock for $36,000.
d. credit to Common Stock for $27,000.
5. The purchase of treasury stock
a. increases total assets and decreases total stockholders' equity.
b. decreases total assets and decreases total stockholders' equity.
c. increases total assets and increases total stockholders' equity.
d. decreases total assets and increases total stockholders' equity.
6. The resale of treasury stock for an amount greater than its cost
a. increases net income.
b. increases total assets and decreases total stockholders' equity.
c. decreases total assets and increases total stockholders' equity.
d. increases total assets and increases total stockholders' equity.
7. Each of the following decreases retained earnings except
a. stock splits.
b. large stock dividends.
c. small stock dividends.
d. cash dividends.
8. Treasury stock is reported in the balance sheet as a deduction from
a. capital stock.
b. additional paid-in capital.
c. retained earnings.
d. paid-in capital and retained earnings.
Homework Answers
Question 4
Correct answer------------c. debit to Treasury Stock for $36,000..
Treasury stock are recorded at cost. The original cost of shares does not matter in recording treasury stock purchase.
Question 5
Correct answer------------b. decreases total assets and decreases total stockholders' equity.
.
Treasury stock purchase decrease overall stockholder's equity and decrease cash balance with the amount of cash paid for purchase.
Question 6
Correct answer------------d. increases total assets and increases total stockholders' equity.
.
Sale of treasury stock at profit increase treasury stock paid in capital and it also increase cash hence asset as well as equity increase.
Question 7
Correct answer------------a. stock splits..
In stock split the number of shares increase but the overall paid in capital remain same. In all other dividends retained earnings decrease.
Question 8
Correct answer------------a. capital stock.
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