Use the Following Information to Answer the Question Below $\begin{array}{l}\text {Cash } & 40,000\\\text { Treasury Stock-Common }&& 40,000\end{array}$

question 41

Multiple Choice

Use the following information to answer the question below. On January 1,2009,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 1,2009,Falcon purchased 1,000 shares of treasury stock for $19 per share and later sold the treasury shares for $26 per share on March 2,2009.
The entry to record the sale of the treasury shares on March 2,2009 is:

• A)
• \(\begin{array}{l}
• \text {Cash } & 40,000\\
• \text { Treasury Stock-Common }&& 40,000
• \end{array}\)
• B)
• \(\begin{array}{lr}
• \text { Cash } & 40,000 \\
• \text { Treasury Stock-Common } &&36,000 \\
• \text { Paid-in Capital, Treasury Stock } &&4,000
• \end{array}\)
• C)
• \(\begin{array}{ll}
• \text { Cash } & 40,000 \\
• \text { Treasury Stock-Common } &&36,000\\
• \text { Retained Earnings }&&4,000
• \end{array}\)
• D)
• \(\begin{array}{ll}
• \text { Cash } & 40,000 \\
• \text { Treasury Stock-Common } &&36,000 \\
• \text { Gain on Treasury Stock }&&4,000
• \end{array}\)

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Definitions:

Actual Price Level

The current index of prices for goods and services, reflecting inflation or deflation in an economy.

Short-run

A period in which at least one input is fixed while others can be varied to change the level of output.

Wage Rates

The standard amount of compensation a worker receives for labor, typically expressed per hour, day, or piece.

Sticky Downward

Describes prices or wages that are resistant to decrease even in conditions where economic theory suggests they should fall, contributing to slow adjustments in markets.