Part a Lena Dress Company previously purchased 8,000 shares of treasury stock on
ID: 2391429 • Letter: P
Question
Part a Lena Dress Company previously purchased 8,000 shares of treasury stock on the open market for $8 per share. Later, the company resells 5,000 shares for $10 per share. What is the journal entry for the sale?
Question a options:
debit cash, $50,000; credit treasury stock, $40,000; credit additional paid-in capital—treasury stock, $10,000
debit cash, $50,000; credit treasury stock, $10,000; credit additional paid-in capital, $40,000
debit cash, $50,000; credit treasury stock, $50,000
debit cash, $50,000; credit treasury stock, $40,000; credit retained earnings, $10,000
part b
The Alpha Company has 100,000 shares of $5 par common stock outstanding. Management declares (not pays) a 10% stock dividend. The market value of a share of common stock was $15 immediately prior to the stock dividend declaration. The journal entry is:
Question b options:
.debit stock dividends distributable, $50,000; credit common stock, $50,000.
debit retained earnings, $150,000; credit stock dividend distributable, $5,000; credit paid in capital in excess of par, $145,000.
debit stock dividends distributable, $150,000; credit common stock, $150,000.
debit retained earnings, $150,000; credit stock dividend distributable, $50,000; credit paid in capital in excess of par, $100,000
debit cash, $50,000; credit treasury stock, $40,000; credit additional paid-in capital—treasury stock, $10,000
debit cash, $50,000; credit treasury stock, $10,000; credit additional paid-in capital, $40,000
debit cash, $50,000; credit treasury stock, $50,000
debit cash, $50,000; credit treasury stock, $40,000; credit retained earnings, $10,000
part b
The Alpha Company has 100,000 shares of $5 par common stock outstanding. Management declares (not pays) a 10% stock dividend. The market value of a share of common stock was $15 immediately prior to the stock dividend declaration. The journal entry is:
Question b options:
.debit stock dividends distributable, $50,000; credit common stock, $50,000.
debit retained earnings, $150,000; credit stock dividend distributable, $5,000; credit paid in capital in excess of par, $145,000.
debit stock dividends distributable, $150,000; credit common stock, $150,000.
debit retained earnings, $150,000; credit stock dividend distributable, $50,000; credit paid in capital in excess of par, $100,000
Explanation / Answer
Part a
Answer is A
Part b
Answer is D
General Journal Debit Credit Cash(5,000 * $10) $50,000 Treasury stock(5,000 * $8) $40,000 Additional paid-in capital—treasury stock $10,000