The Stockholders' Equity Section of the Balance Sheet of Caesar

question 91

Multiple Choice

The stockholders' equity section of the balance sheet of Caesar Corporation at December 31, 2009, appears as follows: (The company engaged in no treasury stock transactions prior to 2009)
$\begin{array}{lrr} \text { Stockholders' Equity } &\\ \text { \( \$ 2 \) preferred stock, \$100 par, 10,000 shares authorized, 8,000 shares issued } &\$800,000\\ \text { Common stock, \( \$ 2 \) par, 100,000 shares authorized, 75,000 shares } &\\ \text {issued, 5,000 are held in the treasury } &150,000\\\\ \text { Additional Paid-in Capital: } &\\\text { From issuance of preferred stock } & 80,000 \\\text { From issuance of common stock } & 225,000 \\\text { From treasury stock transactions } & 8,000 \\\text { From common stock dividends } & 26,000\\ \text { Total paid-in capital } &1,289,000\\ \text {Retained earnings ( \( \$ 40,000 \) equal to cost of treasury stock is } &\\ \text { not available for dividends) } &500,000\\&1,789,000\\ \text {Less treasury stock (at cost: 5,000 common shares) }&(40,000) \\ \text {Total Stockholders' equity}&\$1,749,000\end{array}$

-Refer to the information above. What was the original cost of the treasury stock to Caesar Corporation?

• A) $5 per share.
• B) $7 per share.
• C) $8 per share.
• D) Cannot be determineD.$40,000/5,000 = $8

---

Definitions:

English Proficiency

The ability to speak, write, and understand English at a level that is sufficient for effective communication in an English-speaking context.

Bottom-up Mathematics

An approach to learning mathematics that starts with specific instances or data and builds toward general principles, as opposed to beginning with abstract concepts.

Snowball Effect

A situation where something initially small in significance or size grows exponentially as it progresses.

Cultivation Hypothesis

A theory suggesting that long-term exposure to media, especially television, shapes viewers' perceptions of reality.