Multiple Choice Question 98 Blue purchased 2900 shares of its own previously iss
ID: 2430007 • Letter: M
Question
Multiple Choice Question 98
Blue purchased 2900 shares of its own previously issued $10 par common stock for $87000. As a result of this event,
Blue Common Stock account decreased $29000.
Blue total stockholders’ equity decreased $87000.
Blue Paid-in Capital in Excess of Par Value account decreased $58000.
All of these answer choices are correct.
Multiple Choice Question 111
Pina Colada Corp. issues 37000 shares of $50 par value preferred stock for cash at $65 per share. In the stockholders' equity section, the effects of the transaction above will be reported
entirely under the retained earnings section.
entirely within the capital stock section.
entirely within the additional paid-in capital section.
under both the capital stock and additional paid-in capital sections.
Multiple Choice Question 112
Wildhorse Co. issues 41000 shares of $100 par value preferred stock for cash at $110 per share. The entry to record the transaction will consist of a debit to Cash for $4510000 and a credit or credits to
Paid-in Capital from Preferred Stock for $4510000.
Preferred Stock for $4510000.
Preferred Stock for $4100000 and Paid-in Capital in Excess of Par Value—Preferred Stock for $410000.
Preferred Stock for $4100000 and Retained Earnings for $307500.
Blue Common Stock account decreased $29000.
Explanation / Answer
Blue
Answer: Blue total stockholders' equity decreased $87000.
The cost of stock repurchased is shown as a deduction under stockholders' equity thus resulting in a decrease in the total stockholders' equity. Common stock is reduced only when the repurchased shares are retired.
Pina Colada Corp.
Answer: Under both the capital stock and additional paid-in capital sections.
The journal entry to record the transaction will be:
$1850000 will be reported under the capital stock section while $555000 will be reported under additional paid-in capital section.
Wildhorse Co.
Answer: Preferred stock for $4100000 and paid-in capital in excess of par value-preferred stock for $410000.
The journal entry to record the transaction will be:
Description Debit Credit Cash (37000 x $65) 2405000 Preferred stock (37000 x $50) 1850000 Paid-in capital in excess of par-preferred 555000Related Questions
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