Jay-Cee Corporation Had 20,000 Shares of $4 Par Value Common

question 202

Multiple Choice

Jay-Cee Corporation had 20,000 shares of $4 par value common stock outstanding on January 1.On January 20,the company purchased 2,000 of its stock for $16 per share.On July 3,the company reissued 1,000 of the shares at $20 per share.Jay-Cee uses the cost method to account for its treasury stock.Assume the company paid a dividend of $5 per share on August 3.What is the total amount of the dividends that would be paid to the common stockholders?

• A) $95,000
• B) $100,000
• C) $90,000
• D) $76,000

---

Definitions:

Capitalize

To record an expenditure as an asset on the balance sheet rather than expensing it, in order to spread the cost over its useful life.

CICA Handbook

The comprehensive guide published by the Canadian Institute of Chartered Accountants containing accounting and auditing standards in Canada.

Equity Method

An accounting technique used for investments in which the investor has significant influence over the investee but does not exert full control, reflecting the investor's share of the investee's profits and losses.

Cost Method

An accounting method used to value certain investments based on their original purchase cost, without reflecting market value changes until realized.