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15 - 16 Test Bank for Intermediate Accounting, Twelfth Edition
76.
Renfro Corporation started business in 1999 by issuing 200,000 shares of $20 par
common stock for $36 each. In 2004, 20,000 of these shares were purchased for $52 per
share by Renfro Corporation and held as treasury stock. On June 15, 2008, these 20,000
shares were exchanged for a piece of property that had an assessed value of $810,000.
Renfro’s stock is actively traded and had a market price of $60 on June 15, 2008. The
cost method is used to account for treasury stock. The amount of paid-in capital from
treasury stock transactions resulting from the above events would be
a. $800,000.
b. $480,000.
c. $390,000.
d. $160,000.
77.
On September 1, 2008, Zelner Company reacquired 12,000 shares of its $10 par value
common stock for $15 per share. Zelner uses the cost method to account for treasury
stock. The journal entry to record the reacquisition of the stock should debit
a. Treasury Stock for $120,000.
b. Common Stock for $120,000.
c. Common Stock for $120,000 and Paid-in Capital in Excess of Par for $60,000.
d. Treasury Stock for $180,000.
78.
Gannon Company acquired 6,000 shares of its own common stock at $20 per share on
February 5, 2006, and sold 3,000 of these shares at $27 per share on August 9, 2007.
The market value of Gannon's common stock was $24 per share at December 31, 2006,
and $25 per share at December 31, 2007. The cost method is used to record treasury
stock transactions. What account(s) should Gannon credit in 2007 to record the sale of
3,000 shares?
a. Treasury Stock for $81,000.
b. Treasury Stock for $60,000 and Paid-in Capital from Treasury Stock for $21,000.
c. Treasury Stock for $60,000 and Retained Earnings for $21,000.
d. Treasury Stock for $72,000 and Retained Earnings for $9,000.
79.
King Co. issued 100,000 shares of $10 par common stock for $1,200,000. King acquired
8,000 shares of its own common stock at $15 per share. Three months later King sold
4,000 of these shares at $19 per share. If the cost method is used to record treasury stock
transactions, to record the sale of the 4,000 treasury shares, King should credit
a. Treasury Stock for $76,000.
b. Treasury Stock for $40,000 and Paid-in Capital from Treasury Stock for $36,000.
c. Treasury Stock for $60,000 and Paid-in Capital from Treasury Stock for $16,000.
d. Treasury Stock for $60,000 and Paid-in Capital in Excess of Par for $16,000.
80.
An analysis of stockholders' equity of Jinn Corporation as of January 1, 2007, is as
follows:
Common stock, par value $20; authorized 100,000 shares;
issued and outstanding 90,000 shares
Paid-in capital in excess of par
Retained earnings
Total
$1,800,000
900,000
760,000
$3,460,000
Jinn uses the cost method of accounting for treasury stock and during 2007 entered into
the following transactions:
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