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39. ―Gains" on sales of treasury stock (using the cost method)
should be credited to
a. paid-in capital from treasury stock.
b. capital stock.
c. retained earnings.
d. other income.
40. Porter Corp. purchased its own par value stock on January 1,
2012 for $20,000 and debited the treasury stock account for the
purchase price. The stock was subsequently sold for $12,000. The
$8,000 difference between the cost and sales price should be recorded
as a deduction from
a. additional paid-in capital to the extent that previous net "gains"
from sales of the same class of stock are included therein; otherwise,
from retained earnings.
b. additional paid-in capital without regard as to whether or not
there have been previous net "gains" from sales of the same class of
stock included therein.
c. retained earnings.
d. net income.
41. How should a "gain" from the sale of treasury stock be
reflected when using the cost method of recording treasury stock
transactions?
a. As ordinary earnings shown on the income statement.
b. As paid-in capital from treasury stock transactions.