37. Florida Travel Inc. issues 5,000 shares of $5 pa r value common stock for ).

Question

37. Florida Travel Inc. issues 5,000 shares of $5 pa r value common stock for ). The journal entry to record this issuance would include: A) a debit to Paid-in Capital in Excess of Par of $60,000 B)a credit to Paid-in Capital in Excess of Par of $60,000 el D) E) a credit to Common Stock for $25,000 and a debit to cash for $85,000 A) and C) B) and C) 38. Saddleback Manufacturing Ltd. Purchased 5,000 shares of its own previously issued $10 par value common stock for $95,000. As a result of this event, Saddleback Manufacturing Ltd's Stockholder's Equity Section on the Balance would reflect what? A) Saddleback' s Common Stock account balance would reflect a decrease of $50,000 B) Saddleback's Stockholder's Paid-in Capital account balance would reflecta C) Saddleback's total Stockholder's Equity balance would reflect a decrease D) None of the above. decrease of $95,000. $95,000.

Explanation / Answer

37. Answer: Option E) B) and C)

The journal entry is:

38. Answer: Option C) Saddleback's total Stockholder's Equity balance would reflect a decrease of $95000.

The cost of $95000 at which stock is re-acquired is reported as a deduction from the stockholder's equity thereby reflecting a decrease of $95000 in the total stockholder's equity.

Account Titles and Explanation Debit Credit Cash 85000 Common stock (5000 shares x $5) 25000 Paid-in capital in excess of par 60000

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