Blue Star Films Issues 200,000 No-Par Value Shares for $60

question 38

Multiple Choice

Blue Star Films issues 200,000 no-par value shares for $60 per share in 2018.Three years later,it repurchases 30,000 of these shares for $80 per share.Blue Star records the repurchase in which of the following ways?

• A)Debit Common Shares for $600,000 million and cash for $1.8 million and credit Contributed capital for $2.4 million.
• B)Debit Common Shares for $1.8 million and retained earnings for $600,000 and credit Cash for $2.4 million.
• C)Debit Common Shares for $1.8 million and contributed surplus for $600,000 and credit cash for $2.4 million.
• D)Debit Cash for $2.4 million,credit Common shares for $1.8 million and credit retained earnings for $600,000.

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Definitions:

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted, indicating how much contributes to the fixed costs and profits.

Scatter Diagram

A graph used in statistics to visually display and assess the possible relationship between two numerical variables.

Visual Line Fit

A method in statistical analysis where a line is visually fitted to a set of data points to assess a potential relationship.

Scatter Diagrams

are graphical representations used in statistics to show the relationship between two variables, displaying data points on a two-dimensional plot.