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reissued for cash at a price in excess of its acquisition price.
Assuming that the par value method of accounting for treasury
stock transactions is used, what is the effect on total
stockholders' equity of each of the following events?
Question 2
Murphy Co. had 200,000 shares outstanding of $10 par
common stock on March 30 of the current year. Murphy
reacquired 30,000 of those shares at a cost of $15 per share and
recorded the transaction using the cost method on April 15.
Murphy reissued the 30,000 shares at $20 per share and
recognized a $50,000 gain on its income statement on May 20.
Which of the following statements is correct?
Question 3
On January 1, 2005, Celt Corp. issued 9% bonds in the face
amount of $1,000,000, which mature on January 1, 2015. The
bonds were issued for $939,000 to yield 10%, resulting in a
bond discount of $61,000. Celt uses the effective interest
method of amortizing bond discount. Interest is payable
annually on December 31. At December 31, 2005, Celt's
unamortized bond discount should be
Question 4
In 2000, May Corp. acquired land by paying $75,000 down and
signing a note with a maturity value of $1,000,000. On the
note's due date, December 31, 2005, May owed $40,000 of
accrued interest and $1,000,000 principal on the note. May was
in financial difficulty and was unable to make any payments.