the following information for next uestio On March1,2009, the Miranda Company pu
ID: 2404711 • Letter: T
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the following information for next uestio On March1,2009, the Miranda Company purchased 2,000 shares of its common stock for $25 per share for the treasury. On July 1, 2009, 1,000 of the treasury shares were sold for $30 per share. On October 1,2009, 1,000 of the treasury shares were sold at $15 per share On January 1,2009, Miranda's balance in Retained Eamings was $100,000. During the year, the company had net income of $20,000 and paid dividends of $5,000 39. Which of the following is true regarding the purchase ofstock on March 1? a. Treasury stock decreasedand lotalEquuty decreased b. Treasury stock decreasedand lotalEquity ncreased c. Treasury stockincreased and lotalEquuty decreased d. Treasury stock increased and Total Equity increased e. None of the above 40, Refer to question #39. By what amount did Treasury Stock change, if at all? (Ifthe account balance or amount didnot change, state your answer as "S0.") 41. Refer to question #39. By what amount did Total Equity change, if at all? (Ifthe account balance or amount didnot change, state your answer as "S0.") 42. Which of the following is true regarding the sale oftreasury stock on July 1? a. lreasury stock decreasedand lotalEquity decreased b. lreasury stock decreased and lotalEquty ncreased c. Treasury stock increased and Total Equity decreased d. Treasury stock increased and Total Equity increase,d e. None of the above 43. Refer to question #42. By what amount did Treasury Stock change, if at all? (Ifthe account balance or amount didnot change, state your answer as "S0.") 44. Refer to question #42. By what amount did Total Equity change, if at all? (Ifthe account balance or amount didnot change, state your answer as "S0.") 45. Which ofthe following is true regarding the sale oftreasury stock on October 1? a. lreasury stock decreasedand lotalEquity decreased b. lreasury stock decreased and lotalEquty ncreased c. Treasury stock increased and Total Equity decreased d. Treasury stock increased and Total Equity increased e. None of the above 46. Refer to question #45. By what amount did Treasury Stock change, if at all? (Ifthe account balance or amount didnot change, state your answer as "S0.") 47. Refer to question #45. By what amount did Total Equity change, if at all? (Ifthe account balance or amount didnot change, state your answer as "S0.") 48. Whatis the balance in RetainedEamings atthe end ofthe year?Explanation / Answer
Answer 39 - c. Treasury Stock increased and Total Equity decreased. Treasury Stock or a reacquired stock which means common stock bought back by the company reducing the amount of outstanding stock. Answer 40. Treasury Stock is Increased by = 2,000 Shares X $25 Treasury Stock is Increased by = $50,000 Answer 41. Total Equity decreased by = 2,000 Shares X $25 Total Equity decreased by = $50,000 (Amount of Treasury Stock) Answer 42-b. Treasury Stock decreased and Total Equity increased. As discussed above, if the treasury stock decreased the total equity will increased or vice-a-versa. Answer 43. Treasury Stock is decreased by = 1,000 Shares X $25 (purchased cost of Treasury stock) Treasury Stock is decreased by = $25,000 Answer 44. Total Equity increased by = 1,000 Shares X $30 (SP per Treasury Stock) Total Equity increased by = $30,000 Answer 45-b. Treasury Stock decreased and Total Equity increased. As discussed above, if the treasury stock decreased the total equity will increased or vice-a-versa. Answer 46. Treasury Stock is decreased by = 1,000 Shares X $25 (purchased cost of Treasury stock) Treasury Stock is decreased by = $25,000 Answer 47. Total Equity increased by = 1,000 Shares X $15 (SP per Treasury Stock) Total Equity increased by = $15,000 Answer 48. Retained Earnings Beg. Bal. 100,000.00 Treasury Stock 5,000.00 20,000.00 Net Income Cash Dividends 5,000.00 End. Bal. 110,000.00
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