If 100,000 is borrowed for 9 months at

If treasury stock is re-issued at an amount larger than its reacquisition cost, how would this 'gain' be reflected in the financial statements?

Response Answer Choices

a. as a revenue account reported on the income statement

b. as a liability account shown on the balance sheet

c. as a contra expense account reported on the income statement

d. as an equity account shown on the balance sheet

e. as an asset account shown on the balance sheet

Question 2

The issuance of 200 shares of $1 par value common stock for $10 per share would be recorded with the following journal entry:

Response Answer Choices

a. debit cash $2,000 and credit common stock $2,000

b. debit cash $2,000; credit common stock $200; and credit retained earnings $1,800

c. debit cash $2,000; credit common stock $200; and credit gain on the sale of stock $1,800

d. debit cash $2,000; credit common stock $200; and credit paid in capital in excess of par $1,800

e. debit cash $2,000; credit common stock $1,800; and credit paid in capital in excess of par $200

Question 3

ABC Company purchased 10,000 shares of ZZ, Inc. stock on June 28, 2005 for $15 per share. ABC sold 3,000 of these shares on November 17, 2005 for $21 per share. On December 31, 2005, the ZZ, Inc. stock was selling for $19 per share. ABC Company sold 2,000 of the ZZ, Inc. shares on August 8, 2006 for $8 per share. On December 31, 2006, the value of the ZZ, Inc. stock was $45 per share.

Calculate the amount of the realized loss shown on ABC Company's 2006 income statement.

Question 4

ABC Company purchased 10,000 shares of ZZ, Inc. stock on June 28, 2005 for $15 per share. ABC sold 3,000 of these shares on November 17, 2005 for $21 per share. On December 31, 2005, the ZZ, Inc. stock was selling for $19 per share. ABC Company sold 2,000 of the ZZ, Inc. shares on August 8, 2006 for $8 per share. On December 31, 2006, the value of the ZZ, Inc. stock was $45 per share.

Calculate the amount of the unrealized gain shown on ABC Company's 2006 income statement.

Question 5

XYZ Company paid a total cash dividend of $50,000 to its stockholders in 2004. XYZ Company did not pay dividends in 2003, its first year of operations. XYZ Company has had 400 shares of 8%, cumulative, $100 par value preferred stock and 1,000 shares of $20 par value common stock outstanding since January 1, 2003.

Calculate the amount of the $50,000 dividend that was paid to common stockholders.

Question 6

The following information was available for ABC Company for 1999:

1. Contributed capital (i.e., common stock + paid-in capital) was $180,000 at January 1

and $230,000 at December 31

2. Retained earnings were $20,000 at the beginning of 1999 and $70,000 at the end of

1999

3. Dividends declared and paid during 1999 equaled 20% of the net income for the year

Using the information above, calculate ABC Company's return on equity (ROE) for 1999.

Question 7

Grant, Inc. acquired 30% of South Company's common stock for $350,000 on January 1, 2011. During 2011, South Company reported a net income of $120,000 and paid dividends totaling $30,000. For 2012, South Company earned a $160,000 net income and paid dividends totaling $50,000. On December 31, 2012, Grant, Inc. sold one-half of its investment in South Company for $230,000 cash.

Calculate the total increase to Grant, Inc.'s 2012 net income resulting from the investment in South Company's stock.

Question 8

The stockholders' equity section of the January 1, 2007 balance sheet for XYZ Company is given below:

Common stock, $8 par ............................ $500,000

Paid-in capital – common stock .................. 300,000

Treasury stock (12,000 shares at $14 cost) ...... 168,000

Paid-in capital – treasury stock ................ 12,000

Retained earnings ............................... 75,000

During January, XYZ Company entered into the following transactions:

January 11 Re-issued 3,000 of the treasury shares for $9 per share

January 17 Re-issued 2,000 of the treasury shares for $12 per share

January 24 Issued 4,000 shares of previously un-issued common stock for $17 per share

January 30 Re-issued 4,000 of the treasury shares for $16 per share

Calculate the balance in retained earnings shown in XYZ Company's January 31, 2007 balance sheet after all of the above transactions have been recorded.

Question 9

The stockholders' equity section of the January 1, 2007 balance sheet for XYZ Company is given below:

Common stock, $8 par ............................ $500,000

Paid-in capital – common stock .................. 300,000

Treasury stock (12,000 shares at $14 cost) ...... 168,000

Paid-in capital – treasury stock ................ 12,000

Retained earnings ............................... 75,000

During January, XYZ Company entered into the following transactions:

January 11 Re-issued 3,000 of the treasury shares for $9 per share

January 17 Re-issued 2,000 of the treasury shares for $12 per share

January 24 Issued 4,000 shares of previously un-issued common stock for $17 per share

January 30 Re-issued 4,000 of the treasury shares for $16 per share

Calculate the total stockholders' equity shown in XYZ Company's January 31, 2007 balance sheet after all of the above transactions have been recorded.