Anthem Inc

question 242

Multiple Choice

Anthem Inc.issues 200,000 shares of stock with a par value of $0.01 for $150 per share.Three years later,it repurchases these shares for $80 per share.Anthem records the repurchase in which of the following ways?

• A) Debit Common Stock for $2,000, debit Additional Paid-in Capital for $29,998,000 and credit Cash for $30 million.
• B) Debit Treasury Stock for $16 million and credit Cash for $16 million.
• C) Debit Common Stock for $2,000, debit Additional Paid-in Capital for $15,998,000 and credit Cash for $16 million.
• D) Debit Stockholders' Equity for $30 million, credit Additional Paid-in Capital for $16 million and credit Cash for $16 million.

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Definitions:

Producer Surplus

The difference between what producers are willing to accept for a good or service and the actual price they receive, reflecting producers' benefit.

Costume Jewelry

Fashionable jewelry made from non-precious materials, intended for temporary use with specific outfits rather than as long-term investments.

Marginal Cost

Marginal cost refers to the added expense incurred from producing one more unit of a product or service.

Marginal Benefit

The increase in satisfaction or utility experienced from the consumption or production of one additional unit of a good or service.