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Assume That a Company Issued 10,000 Shares for $30/share and a Par

Question 52
Multiple Choice

Assume that a company issued 10,000 shares for $30/share and a par value of $5/share.1,000 shares were repurchased back at $22/share.Which statement about share repurchases and cancellation is correct? A)Contributed surplus from the share repurchase can be netted against the contributed surplus from share issuance. B)Contributed surplus from the share repurchase must be separated from the contributed surplus on share issuance. C)Contributed surplus arising from share repurchase must be debited in this transaction. D)Contributed surplus from the initial share issuance must now be credited in this transaction.

Related questions
Q 53
Which statement about contributed surplus is correct? A)Contributed surplus can only arise from the issuance of shares. B)Contributed surplus can arise from the issuance of stock options. C)Contributed surplus arising from share repurchase gives rise to a debit journal entry. D)Contributed surplus arising from share issuance gives rise to a debit journal entry.
Q 54
Which statement best describes the accounting when a company cancels its own shares at an amount greater than their par value? A)Retained earnings will be debited at an amount equal to the par value of the shares. B)Retained earnings will be credited at an amount equal to the par value of the shares. C)Contributed surplus will be debited at an amount equal to the par value of the shares. D)Share capital will be debited at an amount equal to the par value of the shares.
Q 55
Which statement about a "reverse stock split" is correct? A)The economic position of the investors is diluted after a stock split. B)The economic position of the investors is increased after a stock split. C)The economic position of the investors is decreased after a stock split. D)The economic position of the investors is unaffected after a stock split.
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