On January 23, Oakley Co

question 92

Essay

On January 23, Oakley Co., for the first time in its short history, purchased 200 shares of its own common stock for $40 a share. On March 31, it sold 100 of those shares for $45 a share and properly recorded $500 as additional paid-in capital. On April 15, it sold the remaining 100 shares for $35 a share. Prepare the journal entry to record the April 15th transaction.

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Definitions:

Fixed Cost

This is a cost that does not change with an increase or decrease in the amount of goods or services produced or sold.

Diminishing Returns

An economic principle stating that adding an additional factor of production results in smaller increases in output after a certain point.

Marginal Output

The additional quantity of output that is produced by using one more unit of a given input.

Negative Returns

Occurs when a company or investment loses more money than it earns or when costs exceed revenues.