Prior to September 30,a Company Has Never Had Any Treasury

question 66

Multiple Choice

Prior to September 30,a company has never had any treasury stock transactions.A company repurchased 1,000 shares of its $2 par common stock on September 30 for $20 per share.On October 2,it reissued 400 of these shares at $21 per share.On October 12,it reissued the remaining 600 shares at $19 per share.The journal entry to record the reissuance of the shares on October 12 would be:

• A)Debit Cash,$11,400; Credit Treasury Stock,$800; Credit Paid-in Capital,Treasury Stock,$10,600.
• B)Debit Cash,$11,400; Debit Paid-in Capital in Excess of Par Value,Common Stock,$600; Credit Treasury Stock,$12,000.
• C)Debit Cash,$11,400; Debit Paid-in Capital in Excess of Par Value,Common Stock,$400; Debit Retained Earnings,$200; Credit Treasury Stock,$12,000.
• D)Debit Cash,$11,400; Debit Paid-in Capital,Treasury Stock,$600; Credit Treasury Stock,$12,000.
• E)Debit Cash,$11,400; Debit Paid-in Capital,Treasury Stock,$400; Debit Retained Earnings,$200; Credit Treasury Stock,$12,000.

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Definitions:

Antitrust Laws

Legislation enacted to prevent monopolies and promote competition among businesses, ensuring fair market practices and consumer protection.

Deadweight Loss

Deadweight loss refers to a loss in economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is not achievable.

Marginal Cost

The cost of producing one additional unit of a product or service, reflecting the change in total cost that arises from an increase in production.

Socially Efficient

The optimal allocation of resources that occurs when the social welfare is maximized, accounting for all costs and benefits to society.