Use the Following Information to Answer the Question Below

question 148

Multiple Choice

Use the following information to answer the question below. On January 1,2013,Falcon Corporation had 40,000 shares of $10 par value common stock issued and outstanding.All 40,000 shares had been issued in a prior period at $17 per share.On February 1,2013,Falcon purchased 1,000 shares of treasury stock for $19 per share and later sold the treasury shares for $26 per share on March 2,2013.
The entry to record the sale of the treasury shares on March 2,2013 is:

• A) Cash 26,000
• Common Stock 19,000
• Retained Earnings 7,000
• B) Cash 24,000
• Retained Earnings 2,000
• Treasury Stock,Common 26,000
• C) Cash 26,000
• Treasury Stock,Common 19,000
• Gain on Treasury Stock,Common 7,000
• D) Cash 26,000
• Treasury Stock,Common 19,000
• Paid-in Capital,Treasury Stock 7,000

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Definitions:

Break-even Point

The level of production or sales at which total revenues equal total expenses, resulting in no net gain or loss.

Sales Mix

The combination of products or services that a company sells, which significantly impacts its profitability.

Fixed Costs

Costs that do not change with the level of goods or services produced by the business.

Break-even Sales

The amount of revenue from sales required to cover all fixed and variable costs of operating a business, resulting in no net profit or loss.