Knowee
Questions
Features
Study Tools

Almond Corporation acquires 10,000 shares of its own $1 par value common stock at $10 per share. The journal entry for this transaction includes a:Multiple Choicedebit to Common Stock for $10,000debit to Treasury Stock for $10,000debit to Common Stock for $100,000debit to Treasury Stock for $100,000

Question

Almond Corporation acquires 10,000 shares of its own 1parvaluecommonstockat1 par value common stock at 10 per share. The journal entry for this transaction includes a:Multiple Choicedebit to Common Stock for 10,000debittoTreasuryStockfor10,000debit to Treasury Stock for 10,000debit to Common Stock for 100,000debittoTreasuryStockfor100,000debit to Treasury Stock for 100,000

🧐 Not the exact question you are looking for?Go ask a question

Solution

The correct answer is: debit to Treasury Stock for $100,000.

Here's the step-by-step explanation:

  1. Almond Corporation is buying back its own shares, which is known as treasury stock.

  2. The company acquired 10,000 shares at 10pershare.Tofindthetotalcost,youmultiplythenumberofsharesbythecostpershare.So,10,000shares∗10 per share. To find the total cost, you multiply the number of shares by the cost per share. So, 10,000 shares * 10/share = $100,000.

  3. When a company buys back its own shares, it debits (increases) its treasury stock account. Therefore, the journal entry for this transaction would include a debit to Treasury Stock for $100,000.

  4. The par value of the stock is not relevant in this case because the treasury stock is recorded at the cost the company paid to reacquire the shares, not the par value of the shares.

So, the correct answer is a debit to Treasury Stock for $100,000.

This problem has been solved

Similar Questions

A company resells 400 shares of its own common stock for $20 per share. The company had acquired these shares two months before for $15 per share. The resale of this stock would be recorded with a:Multiple ChoiceCredit to Treasury Stock for $8,000.Debit to Common Stock for $8,000.Debit to Additional Paid-in Capital for $2,000.Credit to Additional Paid-in Capital for $2,000.

Marina, Incorporated, acquires 1 million shares of its own $1 par value common stock at $70 per share. It later resells the 1 million shares of treasury stock for $75. We record the $5 difference per share as a:Multiple Choicecredit to Additional Paid-in Capitalrevenue in the income statementcredit to Common Stockgain in the income statement

Delta Corporation acquires 10,000 shares of its own $0.01 par value common stock at $10 per share. It later resells the 10,000 shares of treasury stock for $12. The entry to record this transaction will involve a:Multiple Choicecredit to Treasury Stock for $120,000credit to Additional Paid-in Capital for $20,000debit to Cash for $100,000credit to Common Stock for $100

A company issues 10,000 shares of $0.05 par value common stock for $25 per share. Which of the following is recorded at issuance?Multiple ChoiceCredit Common Stock for $500.Credit Additional Paid-In Capital for $500.Credit Additional Paid-In Capital for $250,000.Credit Common Stock for $250,000.

A company issues 1 million shares of common stock with a par value of $0.11 for $15.90 a share. The entry to record this transaction includes a debit to Cash for:Multiple Choice$110,000 and a credit to Common Stock for $110,000.$15,900,000 and a credit to Common Stock for $15,900,000.$15,900,000, a credit to Common Stock for $110,000, and a credit to Additional Paid-in Capital for $15,790,000.$110,000, a debit to Capital Receivable for $15,790,000, a credit to Common Stock for $110,000, and a credit to Additional Paid-in Capital for $15,790,000.

1/3

Upgrade your grade with Knowee

Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.