Question
Asked Dec 19, 2019
1 views

The treasury stock in Discussion Question 7 is resold for $3,750,000.
a. What is the effect on the corporation’s revenue of the period?
b. What is the effect on stockholders’ equity?

check_circle

Expert Answer

Step 1
help_outline

Image Transcriptionclose

Treasury Stock Treasury stock refers to the stock that a company repurchases its own issued stock to serve some specific purposes like gifting it to the employees, issue stock bonus or to support the market price of the stock.

fullscreen
Step 2

a.

 

...
help_outline

Image Transcriptionclose

When the repurchased stock of $3,000,000 is resold at $3,750,000, the transaction is recorded as debit cash for $3,750,000 and credit Treasury Stock for $3,000,000 and credit Paid-in-capital from sale of Treasury Stock for $750,000. Thus in no way revenue of the corporation is affected by this transaction.

fullscreen

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Accounting

Financial Accounting

Related Accounting Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: Applewhite Corporation, a manufacturing company, is analyzing its cost structure in a project to ach...

A: The correct answer is Option (2).

question_answer

Q: If an accrued expense is not recorded at the end of the year, what is the impact on the financial st...

A: Adjusting entries:An adjusting entry is prepared when the trial balance is not up-to-date, and compl...

question_answer

Q: Why is the constant gross-margin percentage NRV method sometimes called a “joint-cost allocation and...

A: Constant gross-margin percentage NRV method: Constant gross margin percentage NRV method is a method...

question_answer

Q: Which situation indicates a net loss within the Income Statement section of the worksheet? Total cr...

A: Income statement:Income statement is the financial statement which reports revenues and expenses fro...

question_answer

Q: Regling Company provides its employees vacation benefits and a defined benefit pension plan. Employe...

A: a. Prepare journal entry to record vacation pay expense.

question_answer

Q: Define research and development and what are its representative cost driver?

A: Cost drivers: It refers to the object or things which affect the costs of a business. For example, v...

question_answer

Q: A stockbroker advises a client to “buy preferred stock. . . . With that type of stock, . . . [you] w...

A: Click to see the answer

question_answer

Q: A storage tank acquired at the beginning of the fiscal year at a cost of $75,000 has an estimated re...

A: (a)Calculate  the amount of annual depreciation by the straight-line method:

question_answer

Q: For several years, Xtreme Co's sales have been on a "cash only" basis. On January 1, 20Y4, however, ...

A: 1)