INTERM.ACCT.:REPORTING...-CENGAGENOWV2
3rd Edition
ISBN: 9781337909358
Author: WAHLEN
Publisher: CENGAGE L
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Textbook Question
Chapter 15, Problem 5C
A corporation sometimes engages in treasury stock transactions.
Required:
- 1. Define treasury stock.
- 2. Why would a corporation acquire treasury stock?
- 3. Briefly explain the cost method of accounting for the requisition and reissuance of treasury stock. Assume the treasury stock is common stock and has a par value.
- 4. Briefly explain the
balance sheet presentation of treasury stock under this method.
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Students have asked these similar questions
Define the term "treasury stock." What are the reasons for a company to purchase treasury stock? What is the accounting treatment of treasury stock on the balance sheet?
How should a "gain" from the sale of treasury stock be reflected when using the cost method of recording treasury stock transactions?
Choices;
As ordinary earnings shown on the income statement.
As an increase in the amount shown for common stock.
As treasury shares premium
As an extraordinary item shown on the income statement.
The journal entry to record the sale of treasury stock might include
a.a credit to Treasury Stock.
b.a credit to Paid-In Capital from Sale of Treasury Stock.
c.a debit to Paid-In Capital from Sale of Treasury Stock.
d.All of these choices are correct.
Chapter 15 Solutions
INTERM.ACCT.:REPORTING...-CENGAGENOWV2
Ch. 15 - Prob. 1GICh. 15 - Prob. 2GICh. 15 - What are the three components and the basic...Ch. 15 - List the various rights of a shareholder. Which do...Ch. 15 - What is the meaning of the following terms: (a)...Ch. 15 - Prob. 6GICh. 15 - Prob. 7GICh. 15 - How does preferred stock differ from common stock?Ch. 15 - What amount of the proceeds from the issuance of...Ch. 15 - Prob. 10GI
Ch. 15 - Prob. 11GICh. 15 - Prob. 12GICh. 15 - Prob. 13GICh. 15 - Prob. 14GICh. 15 - Prob. 15GICh. 15 - Prob. 16GICh. 15 - Prob. 17GICh. 15 - Prob. 18GICh. 15 - Prob. 19GICh. 15 - How is a preferred stock similar to a long-term...Ch. 15 - Prob. 21GICh. 15 - Prob. 22GICh. 15 - Prob. 23GICh. 15 - Prob. 24GICh. 15 - Prob. 25GICh. 15 - What additional disclosures about preferred and...Ch. 15 - Prob. 1MCCh. 15 - Cary Corporation has 50,000 shares of 10 par...Ch. 15 - What is the most likely effect of a stock split on...Ch. 15 - Prob. 4MCCh. 15 - Prob. 5MCCh. 15 - Prob. 6MCCh. 15 - Prob. 7MCCh. 15 - When treasury stock is purchased for cash at more...Ch. 15 - Preferred stock that may be retired by the...Ch. 15 - When treasury stock accounted for by the cost...Ch. 15 - Brown Corporation issues 800 shares of its 5 par...Ch. 15 - Heart Corporation entered into a subscription...Ch. 15 - Blue Corporation issues 200 packages of securities...Ch. 15 - Sun Corporation issues 500 shares of 8 par common...Ch. 15 - Next Level Morgan Corporation issues 500 packages...Ch. 15 - Prob. 6RECh. 15 - On January 1, 2019, Phoenix Corporation adopts a...Ch. 15 - On January 2, 2019, Brust Corporation grants its...Ch. 15 - Prob. 9RECh. 15 - Assume Cole Corporation originally issued 300...Ch. 15 - Violet Corporation issues 1,200 shares of 150 par...Ch. 15 - Assume that Lily Corporation has outstanding 1,500...Ch. 15 - Tulip Corporation uses the cost method to account...Ch. 15 - Par Value and No-Par Stock Issuance Caswell...Ch. 15 - Combined Sale of Stock Maxville Company issues 300...Ch. 15 - Sale of Stock with Bonds Pilsen Company issues 12%...Ch. 15 - Issuance of Stock for Land Putt Company issues 500...Ch. 15 - Prob. 5ECh. 15 - Prob. 6ECh. 15 - Prob. 7ECh. 15 - Prob. 8ECh. 15 - Restricted Share Units On January 2, 2019, Dekker...Ch. 15 - Prob. 10ECh. 15 - Convertible Preferred Stock On January 2, 2019,...Ch. 15 - Prob. 12ECh. 15 - Stock Rights with Preferred Stock Nelson...Ch. 15 - Various Journal Entries Lodi Company is authorized...Ch. 15 - Treasury Stock, Cost Method On January 1, Lorain...Ch. 15 - Contributed Capital Adams Companys records provide...Ch. 15 - Prob. 17ECh. 15 - Treasury Stock, Cost and Par Value Methods On...Ch. 15 - Treasury Stock, No Par Propst-Steele Production...Ch. 15 - Subscriptions On August 3, 2019, the date of...Ch. 15 - Prob. 2PCh. 15 - Prob. 3PCh. 15 - Prob. 4PCh. 15 - Prob. 5PCh. 15 - Prob. 6PCh. 15 - Issuances of Stock Cada Corporation is authorized...Ch. 15 - Issuances of Stock Epple Corporation is authorized...Ch. 15 - Comprehensive Young Corporation has been operating...Ch. 15 - Comprehensive The shareholders equity section of...Ch. 15 - Treasury Stock Analysis Ray Holt Corporation has...Ch. 15 - Comprehensive Byrd Companys Contributed Capital...Ch. 15 - Prob. 13PCh. 15 - Prob. 14PCh. 15 - Reconstruct Journal Entries At the end of its...Ch. 15 - Treasury Stock, Cost Method Bush-Caine Company...Ch. 15 - Prob. 17PCh. 15 - Prob. 1CCh. 15 - Prob. 2CCh. 15 - Prob. 3CCh. 15 - Capital Stock Capital stock is an important area...Ch. 15 - Treasury Stock A corporation sometimes engages in...Ch. 15 - Prob. 6CCh. 15 - Prob. 7CCh. 15 - Compensatory Share Option Plan Tom Twitlet,...Ch. 15 - Prob. 9CCh. 15 - Treasury Stock For numerous reasons, a corporation...Ch. 15 - Prob. 11CCh. 15 - Prob. 12CCh. 15 - Prob. 13CCh. 15 - Prob. 14C
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- Treasury Stock Refer to the information for Heitman Company above. Required: 1. How will this transaction affect stockholders equity? How will this transaction affect net income?arrow_forwardDiscuss the propriety of showing:(a) Treasury stock as an asset.(b) “Gain” or “loss” on sale of treasury stock as additionsto or deductions from income.(c) Dividends received on treasury stock as income.arrow_forwardWhich of the following is not a method that may be used to account for treasury shares?a. Cost methodb. Par value methodc. Retained earnings methodd. Constructive retirement methodCarrow_forward
- .What account should be debited when stock issuance costs are associated with the initial issuance of stock at incorporation? Group of answer choices a. Organization Expense b. Additional Paid-in Capital c. Organization Costs d. Common stockarrow_forwardExplain how a company's Income Statement is affected by treasury stock transactions?arrow_forwardHow is the accounting for a purchase of a company’s own stock (treasury stock) different from the purchase of stock in another corporation?arrow_forward
- Financial Accounting: Treasury stock is?arrow_forwardDescribe the accounting entry for a stock dividend, if any.Describe the accounting entry for a stock split, if any.arrow_forwardWhen a company pays interest on preferred stock, that activity is usually classified as: a. operating b. financing c. investingarrow_forward
- True or False Treasury stock is reported in the stockholders' equity section of the balance sheet.arrow_forwardIn applying the treasury shares (i.e., cash in/cash out) method to determine the dilutive effect of shares, options and warrants, the proceeds assumed to be received upon exercise of the options and warrants Select one: a. are used to calculate the number of common shares repurchased at the average market price, when calculating diluted earnings per share. b. are added, net of tax, to the numerator of the calculation for diluted earnings per share. c. are disregarded in the calculation of earnings per share if the exercise price of the options and warrants is less than the ending market price of common shares. d. are deducted from the income available to common share holders. e. None of the above.arrow_forward1. Treasury stock is presented on the balance sheet as an asset. a liability. a reduction to equity. a memorandum in the notes. 2. Under the cost method, when the corporation reacquires its capital stock, it assumes it will reissue rather than retire the stock. debits Treasury Stock for the price paid. credits Cash for the price paid. does all of these choicesarrow_forward
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