STOCKHOLDER\'S EQUITY January 1, 2015 Stock (6%, $100 par cumulative, 3,000 shar

Question

STOCKHOLDER'S EQUITY January 1, 2015 Stock (6%, $100 par cumulative, 3,000 shares ssued) Common Stock ($5 par value, 300,000 shares authorized) Additional Paid in Capital: 1,000,000 Preferred 15,000 Common 400,000 Retained Earnings, (January 1) Treasury Stock 5,000 shares 488,000 50,000 During 2015, the only transactions and events pertaining to stockholders equity were April 17 Issued 1,000 shares of Preferred stock for $110 per share for cash J22 sued 20000 lars d comon stock tor s ulding On t 2 0 Oct 14 Sold 2,000 shares from treasury for $17 per share for cash. Net income for the year was $215,000. Dividends of $25 per share for common stockholders were declared by the board on Dec. 29. There are no dividends in Dec. 31 The entry to record the Oct 14 transaction would include a credit to A. Cash for $34,000 B. Treasury Stock for $20,000 C. Treasury Stock for $34,000 D. Additional Paid in Capital Treasury Stock for $34,000 E. Common Stock for $20,000

Explanation / Answer

Journal entry for oct 14 :

so answer is b) treasury sotck for $20000

Date accounts & explanation debit credit oct 14 Cash a/c (2000*17) 34000      Treasury stock a/c (2000*10) 20000      Paid in capital from sale of treasury stock 14000 (To record sale of treasury stock)

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