Use the Following Information to Answer the Question Below $\$ 20$

question 116

Multiple Choice

Use the following information to answer the question below. The following transactions involving Lupine Corporation occurred during the year:
Apr. 1 Purchased 2,000 shares of its own preferred stock for $\$ 20$ , the current market price. This is the first transaction involving its own stock engaged in by the company.

May 3 Sold 400 of the shares purchased on April 1 for \$25 per share.
June 5 Retired 600 of the shares purchased on April 1. The original issue price was $\$ 10$ . The par value of the stock is $\$ 5$ .

The entry to record the May 3 transaction would be:

• A)
• \(\begin{array}{l}
• \text {Treasury Stock, Preferred } & 10,000\\
• \text { Cash}&& 10,000
• \end{array}\)
• B)
• \(\begin{array}{l}
• \text { Cash }&10,000\\
• \text { Treasury Stock-Common } && 8,000 \\
• \text { Gain on Treasury Stock } &&2,000
• \end{array}\)
• C)
• \(\begin{array}{l}
• \text { Cash }&4,000\\
• \text { Retained Earnings } & 6,000 \\
• \text { Treasury Stock-Common } &&10,000
• \end{array}\)
• D)
• \(\begin{array}{l}
• \text {Treasury Stock, Preferred } & 8,000\\
• \text { Cash}&& 8,000
• \end{array}\)

---

Definitions:

Major Term

In a syllogism, the predicate of the conclusion that appears in one of the premises.

Conclusion

The final part of an argument, statement, or process that follows logically from the premises or conditions.

Major Premise

The first proposition in a syllogistic argument, which contains the major term (the predicate of the conclusion) and makes a general statement.

Categorical Syllogism

A form of reasoning consisting of three statements - two premises followed by a conclusion, each statement categorically linking terms.