Buffalo Butter Co

question 89

Multiple Choice

Buffalo Butter Co.had 40,000 shares of $4 par value common stock outstanding on January 1.On January 20,the company purchased 4,000 of its stock for $16 per share.On July 3,the company reissued 2,000 of the shares at $20 per share.Buffalo Butter uses the cost method to account for its treasury stock. What journal entry will record the reissuance on July 3?

• A)Debit Cash and credit Treasury Stock for $40,000
• B)Debit Cash for $40,000,credit Treasury Stock for $32,000,and credit Additional Paid-in Capital for $8,000
• C)Debit Cash for $40,000,credit Common Stock for $12,000,and credit Additional Paid-in Capital for $28,000
• D)Debit Cash for $40,000,credit Common Stock for $32,000,and credit Gain on Reissuance of Stock for $8,000

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Definitions:

Unearned Revenue

Money received by a company for goods or services yet to be delivered or performed, representing a liability until the obligation is fulfilled.

Quarterly Journals

Quarterly journals are publications that come out four times a year, offering articles, research, and updates on specific field of interests.

Advance Subscription Sales

Revenue received from customers for subscriptions that have been paid for in advance but the services have not yet been delivered.

Company Mails

Refers to the official correspondences, both electronic and physical, distributed within or from a company.