On December 10, 2010, Smitty Corporation Reacquired 2,000 Shares of Its

question 85

Multiple Choice

On December 10, 2010, Smitty Corporation reacquired 2,000 shares of its own $5 par value common stock at a price of $60 per share. In 2011, 500 of the treasury shares are reissued at a price of $70 per share. Which of the following statements is correct?

• A) The treasury stock purchased is recorded at cost and is shown in Smitty's December 31, 2010 balance sheet as an asset.
• B) The two treasury stock transactions result in an overall net reduction in Smitty's stockholders' equity of $85,000.
• C) Smitty recognizes a gain of $10 per share on the reissuance of the 500 treasury shares in 2011.
• D) Smitty's stockholders' equity was increased by $110,000 when the treasury stock was acquired.

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Definitions:

Polar Covalent

A type of chemical bond where electrons are unequally shared between atoms, resulting in a molecule with an unequal distribution of charge.

Ionic Bond

Chemical bond that is formed when one atom loses an electron and another accepts that electron.

Inorganic Chemists

Scientists who specialize in the study of inorganic compounds, including metals, minerals, and organometallics.

Organic Chemists

Scientists specializing in organic chemistry, focused on the compounds of carbon and designing synthetic pathways for molecules of interest.