Question

1.On March 1, Year 1, ABC Company required 4,000 shares of its common stock for 50 per share. Suppose the company reissued 1,000 shares of its treasury stock on June 1, Year 1, for 44 each.Which of the following is true regarding the entry required to record this transaction?

A. A debit to treasury stock is required for $44,000.

B. A credit to treasury stock is required for $50,000.

C. A credit to retained earnings is required for $6,000

D. A credit to Paid-in capital from treasury stock transaction is required for $6,000

2.Expense result when a business

A. sells equipment

B. consumes resource during the production and sale of goods or services

C. distributes money to owners

D.hires employees

Answer 1

1. Journal entry for re-issue of treasury stock

Date		Debit	Credit
June 01, Year1	Cash	$44,000
	Paid in capital form treasury stock	$6,000
	Treasury stock		$50,000
	To record reissue of treasury stock below cost

Option B is the answer

2.

Option B is the answer

Expense results when a business consumes resources during the production and sale of goods or services.

Expense is an outflow of money incurred for generating revenue, financing, administration, etc.

The sale of equipment is an income to the business.

Distribution of money to owners is called dividend which is distributed out of net earnings.

Hiring employees by itself is not an expense. The time when obligation generates to pay the employee his remuneration, then it is an expense