Use the Following Information to Answer the Question Below $\quad$ Purchased 2,000 Shares of Its Own Preferred Stock for $20

question 38

Multiple Choice

Use the following information to answer the question below. The following transactions involving Cactus Wren Corporation occurred during the year:
Apr. 1 $\quad$ 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 $\quad$ Sold 400 of the shares purchased on April 1 for $25 per share.
June 5 $\quad$ 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 is:

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Definitions:

Direct Materials

Direct materials are raw inputs that are directly consumed in the manufacturing process of a product and can be directly attributed to that product.

Direct Labor

The labor cost of workers directly involved in the production of goods or services.

Process Costing

An accounting methodology that traces and accumulates direct costs, and allocates indirect costs, of a manufacturing process, costing each process separately.

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed goods, converting them into the amount of finished goods units that could have been produced with those costs.