Homework Sourse1 Bond Co purchases 5000 shares of its own common stock for
| 1) Bond Co. purchases 5,000 shares of its own common stock for $50,000. This | ||||||
| acquisition of treasury stock: | ||||||
| A | increases total stockholder\'s equity by $50,000 | |||||
| B | decreases total stockholder\'s equity by $50,000 | |||||
| C | reduces common stock account by $5,000 | |||||
| D | decreases net income by $45,000 | |||||
| 2) Billy Bob Inc. has the following accounts and amounts in its stockholder\'s equity section of the | ||||||
| balance sheet: | ||||||
| 6% Preferred Stock, $100 par value | $ 800,000 | |||||
| Common Stock, $5 par value | $ 500,000 | |||||
| Treasury Stock, $20 cost per share | $ 40,000 | |||||
| What number of common stock is issued and outstanding? | ||||||
| No. shares issued | No. shares outstanding | |||||
| A | 100,000 | 98,000 | ||||
| B | 100,000 | 100,000 | ||||
| C | 440,000 | 60,000 | ||||
| D | 98,000 | 100,000 | ||||
| 3) The stockholder\'s equity section of the Canner Co. balance sheet contains the | ||||||
| following information: | ||||||
| 4% Preferred Stock, $100 par value, cumulative, 5,000 shares issued | $ 500,000 | |||||
| Common Stock, $1 Par Value, 20,000 shares issued | $ 20,000 | |||||
| Dividends were not declared or paid in 2004 or 2005. The board of directors declares | ||||||
| and pays a $50,000 dividined in 2006. In 2006, stockholders should receive dividends | ||||||
| of: | ||||||
| Preferred Stockholders | Common Stockholders | |||||
| A | $20,000 | $30,000 | ||||
| B | $40,000 | $10,000 | ||||
| C | $50,000 | $0 | ||||
| D | $60,000 | $0 |
| 1) Bond Co. purchases 5,000 shares of its own common stock for $50,000. This | ||||||
| acquisition of treasury stock: | ||||||
| A | increases total stockholder\'s equity by $50,000 | |||||
| B | decreases total stockholder\'s equity by $50,000 | |||||
| C | reduces common stock account by $5,000 | |||||
| D | decreases net income by $45,000 | |||||
| 2) Billy Bob Inc. has the following accounts and amounts in its stockholder\'s equity section of the | ||||||
| balance sheet: | ||||||
| 6% Preferred Stock, $100 par value | $ 800,000 | |||||
| Common Stock, $5 par value | $ 500,000 | |||||
| Treasury Stock, $20 cost per share | $ 40,000 | |||||
| What number of common stock is issued and outstanding? | ||||||
| No. shares issued | No. shares outstanding | |||||
| A | 100,000 | 98,000 | ||||
| B | 100,000 | 100,000 | ||||
| C | 440,000 | 60,000 | ||||
| D | 98,000 | 100,000 | ||||
| 3) The stockholder\'s equity section of the Canner Co. balance sheet contains the | ||||||
| following information: | ||||||
| 4% Preferred Stock, $100 par value, cumulative, 5,000 shares issued | $ 500,000 | |||||
| Common Stock, $1 Par Value, 20,000 shares issued | $ 20,000 | |||||
| Dividends were not declared or paid in 2004 or 2005. The board of directors declares | ||||||
| and pays a $50,000 dividined in 2006. In 2006, stockholders should receive dividends | ||||||
| of: | ||||||
| Preferred Stockholders | Common Stockholders | |||||
| A | $20,000 | $30,000 | ||||
| B | $40,000 | $10,000 | ||||
| C | $50,000 | $0 | ||||
| D | $60,000 | $0 |
Solution
1. Acquistion of treasury stock decreases total stockholder\'s equity by $50,000
2. Number of preferred shares 800,000/100 = 8000
Number of common stock shares 100,000
Number of treasury shares 2000
Number of common stock outstanding shares = total common shares - treasury stock
= 100000-2000 = 98000
