At the End of the Prior Year,Atoka Industries Reported the Following

question 170

Multiple Choice

At the end of the prior year,Atoka Industries reported the following account balances:

The treasury stock arose from a purchase of 10,000 shares of common stock for $78 per share.If the 10,000 treasury shares are issued for $50 per share in in the current year,what journal entry must be prepared to record the transaction?

• A) Debit Cash for $500,000, debit Other Losses for $280,000, and credit Treasury Stock for 780,000
• B) Debit Cash for $500,000, credit Common Stock for $100, and credit Additional Paid-in Capital for $499,900
• C) Debit Cash for $500,000, debit Additional Paid-in Capital for $280,000, and credit Treasury Stock for $780,000
• D) Debit Cash and credit Treasury Stock for $500,000

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Definitions:

Excise Tax

A tax imposed on specific goods or services at purchase such as gasoline, tobacco, and alcohol.

Highly Inelastic

Describes a situation where the demand or supply for a good or service is hardly affected when the price changes.

Highly Elastic

Describes a situation where the demand or supply of a product changes significantly in response to changes in price.

Excise Tax

A tax on the sale or consumption of specific goods or services, such as alcohol or gasoline.