A Corporation Originally Issued $5 Par Value Stock for $6

question 142

Multiple Choice

A corporation originally issued $5 par value stock for $6 per share. Which of the following would be included in the entry to record the purchase of 200 shares of treasury stock for $8 per share?

• A) Treasury stock would be debited for $1,600.
• B) Treasury stock would be credited for $1,600.
• C) Retained earnings would be debited for $1,000.
• D) Treasury stock would be debited for $1,000.

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Definitions:

Cash Realizable Value

The amount of cash expected to be received from the liquidation of assets or completion of transactions.

Trade Receivables

Notes and accounts receivable that result from sales transactions.

Notes Receivables

Written promises for amounts to be received, typically including interest, indicating that another party owes the business money.

Contra Asset Account

An account offset against an asset account on the balance sheet.