Duke Corporation Reports the Following Components of Stockholders' Equity on December

question 118

Multiple Choice

Duke Corporation reports the following components of stockholders' equity on December 31,2010.
$\begin{array}{lr} \text {Common stock- \( \$ 25 \) par value, 100,000 shares authorized, 45,000 shares issued}\\ \text { and outstandino}&\$1,125,000\\ \text { Paid-in capital in excess of par value, common stock } & 60,000 \\ \text { Retained earnings } & 460,000 \\ \text { Total stockholders' equity } & \$ 1,645,000 \\\end{array}$

In year 2011,the following transactions affected its stockholders' equity accounts.
Jan. 1 Purchased 4,500 shares of its own stock at $\$ 27$ cash per share.
Jan. 5 Directors declared a $\$ 3$ per share cash dividend payable on Feb. 28 to the Feb. stockholders of record.

Feb. 28 Paid the dividend declared on January 5.
Mar. 3 Sold 1,000 shares of treasury stock for $\$ 28$ per share

What is the journal entry required for the March 3^rd transaction?

• A)
• \[\begin{array} { |l| r | r | }
• \hline \text { Cash } & 28,000 & \\
• \hline \text { Treasury Stock } & & 25,000 \\
• \hline \text { Paid in Capital, Treasury Stock } & & 3,000 \\
• \hline
• \end{array}\]
• B)
• \(\begin{array}{|l|r|r|}
• \hline \text { Cash } & 28,000 & \\
• \hline \text { Treasury Stock } & & 28,000 \\
• \hline
• \end{array}\)
• C)
• \[\begin{array} { |l | r | r | }
• \hline \text { Cash } & 28,000 & \\
• \hline \text { Treasury Stock } & & 27,000 \\
• \hline \text { Paid in Capital, Treasury Stock } & & 1,000 \\
• \hline
• \end{array}\]
• D)
• \[\begin{array} { | l | r | r | }
• \hline \text { Cash } & 28,000 & \\
• \hline \text { Common Stock } & & 25,000 \\
• \hline \text { Paid in Capital, Common Stock } & & 3,000 \\
• \hline
• \end{array}\]
• E)
• \[\begin{array} { | l | r | r | }
• \hline \text { Cash } & 28,000 & \\
• \hline \text { Retained Earnings } & &2 8 , 0 0 0 \\
• \hline
• \end{array}\]

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Definitions:

External Balancing

A strategy implemented to match supply and demand by adjusting capacity externally, often through outsourcing or partnerships.

Production Flexibility

Refers to a company's ability to quickly adjust its production levels and processes to accommodate changes in market demand or to exploit new market opportunities.

Exponential Smoothing

A technique used in time series data to smooth out fluctuations and predict future values.

Demand Management

The process of forecasting, planning, and controlling demand for products and services to meet business needs.