Gannon Company Acquired 10,000 Shares of Its Own Common Stock

question 140

Multiple Choice

Gannon Company acquired 10,000 shares of its own common stock at $20 per share on February 5, 2014, and sold 5,000 of these shares at $27 per share on August 9, 2015. The fair value of Gannon's common stock was $24 per share at December 31, 2014, and $25 per share at December 31, 2015. The cost method is used to record treasury stock transactions. What account(s) should Gannon credit in 2015 to record the sale of 5,000 shares?

• A) Treasury Stock for $135,000.
• B) Treasury Stock for $100,000 and Paid-in Capital from Treasury Stock for $35,000.
• C) Treasury Stock for $100,000 and Retained Earnings for $35,000.
• D) Treasury Stock for $120,000 and Retained Earnings for $15,000.

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Definitions:

Willful Destruction By Fire

An act of intentionally setting fire to property, typically constituting a criminal offense.

Forgery

The act of falsely making or altering a document with the intent to defraud, such as signing another person's name to a check.

Counterfeiting

The creation of imitation products, currency, or documents with the intent to deceive or defraud by passing the fake item off as genuine.

Trademarks

Legal symbols, words, or phrases registered to represent a company or product, used to distinguish them from competitors.