DWWR Purchased Its Own Common Shares for $20,000 and Debited

question 90

Multiple Choice

DWWR purchased its own common shares for $20,000 and debited the treasury stock account for the purchase price.The shares were subsequently sold for $17,000.The $3,000 difference between the cost and sale price should be recorded as a reduction of:

• A)The beginning balance of retained earnings.
• B)Revenues on the income statement.
• C)Contributed capital from treasury stock transactions without regard as to whether or not there have been previous net "gains" from sales or retirements of the same class of shares.
• D)Contributed capital from treasury stock transactions to the extent of previous net "gains" from sales or retirements of the same class of shares; otherwise retained earnings should be reduced.

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Definitions:

Extensor Digiti Minimi

A muscle in the forearm that functions to extend the little finger.

Rotator Cuff

Four deep muscles that attach the humerus to the scapula.

Infraspinatus

A thick triangular muscle located on the back of the shoulder which helps in the rotation and stabilization of the shoulder joint.

Coracobrachialis

A muscle in the shoulder that assists with flexion and adduction of the arm at the shoulder joint.