Answer:
the halo effect.
Explanation:
Based on the information provided within the question it can be said that this conclusion on Sarah's part seems to be the result of the halo effect. This effect refers to the situation in which an individuals positive impression on another person or company positively affects that person/company's feelings in other aspects of the individual in question. Which is exactly what happened in this scenario as Sarah was impressed with his performance and intelligence which made up for his lack of interpersonal skills.
Baker Electronics reports the following data for the year ended December 31, 2019: Cash receipt from sale of equipment $40,000 Depreciation Expense 15,000 Cash payment of Dividends 7,000 Cash receipt from issuance of Common Stock 21,000 Net Income 50,000 Cash purchase of Land 20,000 Increase in Current Liabilities 11,000 Decrease in Current Assets other than Cash 10,000 What is the cash flow from operating activities?
Final answer:
The cash flow from operating activities is $74,000.
Explanation:
To calculate the cash flow from operating activities, we need to consider the cash inflows and outflows directly related to the company's core operations. In this case, we include the following:
Cash receipt from sale of equipment: $40,000
Depreciation Expense: $15,000
Net Income: $50,000
Decrease in Current Assets other than Cash: $10,000
Increase in Current Liabilities: $11,000
To calculate the cash flow from operating activities, we sum up the cash inflows and subtract the cash outflows. Adding the cash receipt from the sale of equipment, net income, and the decrease in current assets, and subtracting the depreciation expense and increase in current liabilities, we get:
Cash Flow from Operating Activities = $40,000 + $50,000 + $10,000 - $15,000 - $11,000 = $74,000
Final answer:
The cash flow from operating activities is calculated using the indirect method, which involves adjusting the net income for non-cash expenses and changes in working capital. For Baker Electronics, the cash flow from operating activities for the year ended December 31, 2019, is $66,000.
Explanation:
To calculate the cash flow from operating activities using the indirect method, we start with the net income and adjust for changes in balances of working capital accounts and non-cash expenses. Firstly, we add back the Depreciation Expense of $15,000 to the net income because it is a non-cash expense. Since an increase in Current Liabilities like accounts payable indicates that less cash was spent than recorded in operating expenses, we add this increase of $11,000 to net income. Likewise, a decrease in Current Assets other than Cash suggests that less cash was received from customers than the sales recorded on an accrual basis, so we subtract this decrease of $10,000 from net income.
The calculation is as follows:
Start with Net Income: $50,000
Add Depreciation Expense: $15,000
Add Increase in Current Liabilities: $11,000
Subtract Decrease in Current Assets: $10,000
Cash Flow from Operating Activities = Net Income + Depreciation Expense + Increase in Current Liabilities - Decrease in Current Assets
Cash Flow from Operating Activities = $50,000 + $15,000 + $11,000 - $10,000
Cash Flow from Operating Activities = $66,000
Clomien Corp., a law firm, needs frequent interpretation of its stored data for cross-references and formulation of decisions. It uses a(n) _____ to help it discover subtle and complex relationships hidden in its data.
Answer:
Business Intelligence system.
Explanation:
Based on the information provided within the question it can be said that Clomien Corp. uses a Business Intelligence system. This is a system that contains historical and current views regarding business operations, and like mentioned in the question it can provide predictive views by discovering subtle and complex relationships within its data.
Lisa, a compensation analyst for a large government agency, is completing a job evaluation for her organization. She is reviewing the grades that have been established by skills, knowledge and abilities because several managers have complained that the jobs no longer "fit" into the defined grades.
What job evaluation method is Lisa using?
Ordering
Classification
Basic factors
Point method
Prioritization
Answer:
Classification.
Explanation:
Classification is a work evaluation method that is characterized by establishing a grid hierarchy whose works are evaluated by a grade structure. In this method there is an appropriate work classification standard, which corresponds to a set of standards and procedures expected for classification. The standard assists in the description and distinction of each relevant feature found at each job level, and is a benchmark for position classification.
The grade / category structure is a simple implementation and maintenance method and ensures faster grading processes.
Austin and Erin are willing to pay $10 and $9, respectively, for a ticket to a screening of a new movie. What is the total consumer surplus for both Austin and Erin if the market price of a ticket is $6?
A) $4
B) $7
C) $9
D) $19
Answer:
B) $7
Explanation:
The computation of the consumer surplus is shown below:
Consumer surplus = Willing to pay - Market price
For Austin, The consumer surplus = $10 - $6 = $4
For Erin, The consumer surplus = $9 - $6 = $3
So, the total consumer surplus = $4 + $3 = $7
Simply we deduct the market price from the willing to pay so that the consumer surplus can be computed
Which of the following is NOT a condition that favors the success of vertical integration?
a. availability of capital
b. availability of managerial talent
c. sufficiently high demand
d. small market share
e. All of these favor the success of vertical integration.
Answer:
d. small market share
Explanation:
Vetical integration is usually done to gain more market share and economies of operations and to win over competitors. If the vertical integration has less market share the company may not expand much and attain benefits.
Traditional home mortgage underwriting is said to rest on three elements, the "three C's." The housing expense ratio is one tool that lenders will use to address concerns associated with which of the "three C's"?
a) collateral
b) creditworthiness
c) capacity
d) capability
Answer:
The three C's are Collateral, Creditworthiness, Capacity
Explanation:
The underwriters take a risk to loan you for the mortgage for this purpose they need to verify your paperwork so as to determine your eligibility to get a mortgage, which is based on;
Creditworthiness: It is your credit score and your account and payment history. It also includes your previous loans and purchases.Capacity: It is a check on your ability to repay the loan. It is basically a debt-to-income ratio. The lender goes through your salary, income, expenditure and debts to confirm that you can actually repay the loan.Collateral: Literally it means an asset of the borrower kept by the lender as a security of safe return of the loan. in case of house mortgage collateral is mostly 20% down payment of the mortgage being received. If the borrower fails to repay the loan the lender seizes collateral to recover the loss.under what circumstances should a company's management team give serious consideration to making an offer to supply private label footwear to chain values in a particular geographic region?
Answer:
This question is incomplete and incorrect in some parts, here is the full one:
Under what circumstances should a company's management team give serious consideration to making price offers to supply private-label footwear to chain retailers in one or more regions?
a) When the benchmarking data at the bottom of p. 7 of the latest FIR indicates that all sellers of private label footwear in that geographic region had a margin over direct costs of more than $2.50 per pair of private-label footwear sold to chain retailers
b) When chain retailers want to purchase private-label footwear with an S/Q rating that is 2- stars or more below last year's industry average for branded footwear
c) When the data in the latest Competitive Intelligence Report indicates that all of the winning bidders for P-L contracts sold more than 500,000 pairs of P-L shoes
d) When company managers conclude that the company has more than enough production capacity to produce the needed pairs of branded footwear and, based on their projections, determine that the company's profitability can be enhanced by making price offers to chain retailers and winning contracts to supply them with private-label footwear
e) When the company's market share for branded footwear in a geographic region is below the industry average and all the sellers of private-label footwear in the prior year made money on their private-label contracts
The answer is d)
Explanation:
A common misconception when it comes to manufacturing private-label goods is related to the lack of lucrativeness. Some may ask: Why should I manufacture goods for a retailer when I can sell them under my own brand?
The truth is - most companies (given their production management is efficient) have excess production capacity. That means that for a particular period, they are able to manufacture goods with a low, competitive cost per unit. Only when the production capacity is fully used, the production is optimal.
However, since most companies have a precisely defined budget for marketing, branding, packaging, distribution and logistics, sometimes it is very profitable to allocate some production capacity aimed just for products for a private-label.
This way, the costs related to marketing, branding, etc. will be transferred on to the retailer, while we reach our full production capacity in a particular geographical area of operating.
A company's management team should consider supplying private label footwear to chain values in a particular geographic region if there is significant demand and if the company has the capacity and resources to do so effectively.
Explanation:A company's management team should give serious consideration to making an offer to supply private label footwear to chain values in a particular geographic region under certain circumstances.
One circumstance is if the management team identifies a significant demand for private label footwear in that region. This can be determined through market research and analysis of consumer preferences.
Another circumstance is if the company has the capacity and resources to effectively supply private label footwear to chain values in that region without compromising the quality or timeliness of production.
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Marcie works as a salesperson for a major cosmetics manufacturer. She typically begins by approaching potential customers with very expensive products, even though she knows that they will refuse. This refusal makes it easier for Marcie to sell other products which are relatively cheaper by showing consumers that she has been "apparently hurt" by their rejection. This is an example of the _____ sales technique.
Answer:
door in the face sales technique
Explanation:
The door in the face (DITF) sales technique is used when the salesperson purposely makes a large request knowing that it will be rejected, and then following the sales approach by offering a much smaller request that is more reasonable and easily accepted.
For example, you want your parents to buy you a new motorcycle. Instead of asking your parents for a new motorcycle, you ask them to buy you a car. You know that they will probably reject the idea of giving you a car, but after they reject your initial proposal, you ask them to at least buy you a motorcycle. That will seem to be a much more reasonable request.
Advertisements for Listerine mouthwash claimed that it was as effective as flossing in preventing tooth plaque and gum disease. This statement was true, but only if the flossing was done incorrectly. In fact, many consumers do floss
incorrectly. However, if flossing is done right, it is more effective against plaque and gum disease than Listerine. Is this advertisement deceptive?
Answer:
The answer is yes, it is deceptive.
Explanation:
Because Listerine was advertising a false information. It is a crime.
A US District Judge Denny Chin ruled against the listerine advertisements under the argument that they were false and misleaded and posed a publick health risk. The judge said that the implicit message that Listerine can replace floss is false and misleading, the dentists and hygienists have been telling their patients for decades to floss daily.
The Listerine advertisement is deceptive in the sense that it omits crucial information about the relative effectiveness of flossing done correctly versus using Listerine. This can be viewed as a misrepresentation through omission, which is a common ethical issue in advertising.
Explanation:This question pertains to the ethical considerations surrounding advertising communication. On one hand, the Listerine advertisement is factually accurate in the sense that if a person flosses incorrectly, using Listerine could indeed be as effective in preventing tooth plaque and gum disease. On the other hand, the advertisement can be viewed as deceptive because it fails to provide the full context that when flossing is done correctly, it is more effective than using Listerine.
This situation arguably represents a misrepresentation of facts through omission, a common business ethics issue in advertising. The advertisement presents only some of the facts, intentionally omitting crucial information that flossing done right is more effective. Therefore, while not outright lying, the advertisement can be perceived as misleading, hence, deceptive.
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An optimal solution to a linear programming problem MUST lieA. somewhere in the interior of the feasible region.B. somewhere outside of the feasible region.C. at the intersection of at least two constraints.D. somewere on the line between two corner points.
Answer:
C. at the intersection of at least two constraints.
Explanation:
Every linear equation has an objective function, further it has the constraints.
In a linear equation when we find the value of constraints where, the value of at least two constraints shall meet, in order to find the solution.
This provides a solution set as when they intersect there are chances of solution, and accordingly even the objective function is easily achieved.
Accordingly the best set which fulfills the objective function where the constraints are also matching the criteria, there lies a solution set.
A "best practice" refers to: a policy or procedure that is unusually effective. a method of performing an activity or business process that consistently delivers superior results compared to other approaches and that at least one company has demonstrated works particularly well in terms of delivering operating excellence. a strategy-critical activity that results in sustainable competitive advantage. a value chain activity that is a company's distinctive competence. a particular value chain activity that management has given top priority to performing in world-class fashion.
Answer:
method of performing an activity or business process that consistently delivers superior results compared to other approaches and that at least one company has demonstrated works particularly well in terms of delivering operating excellence.
Explanation:
Best practice in business is performing the best work possible in order to achieve the company's goals. You have to continuously compare your performance against that of your competition to ensure that your work is among the best in the industry. When your company adopts best practice performance strategies, you become more competitive (e.g. increase sales, reduce costs, improve skills, etc.).
Aharon exercises 10 stock options awarded several years ago. The following information pertains to the options_______.
(1) each option gives the employee the right to buy 10 shares,
(2) the market price on the grant date was $7,
(3) the strike price is $10, and
(4) the market price on the exercise date was $15.
How much will it cost Aharon to purchase the options on the exercise date?
Answer:
$1,000
Explanation:
Whenever an option is provided to an employee for stock purchase then the cost of such option is the price at which the issue is offered.
Accordingly the actual amount paid to acquire the issue is the cost to acquire such issue.
Thus, the issue granted = 10 stock options
Each option has 10 shares.
Thus, total number of shares offered = 10 [tex]\times[/tex] 10 =100
The strike price for issue = $10 for each share.
Actual cost = Strike Price [tex]\times[/tex] Number of shares = $10 [tex]\times[/tex] 100 = $1,000.
At Crater Valley Manufacturing, workers are encouraged to find their own solutions to problems, and to implement their solutions when practical. They work with little supervision because management feels they are committed and creative workers. Crater Valley's policy reflects a ________ attitude about workers.
a) Theory Y
b) Theory X
c) Theory W
d) Theory Z
Answer:
a) Theory Y
Explanation:
Crater Valley Manufacturing has adopted the theory Y management approach. Theory Y proposes a participative management style, teamwork, and decentralization of the decision-making process. In the theory Y approach, managers encourage employees initiatives that will contribute to the success of the organization. Theory Y tries to match the organizations' objectives with the employees' aspirations.
Some of theory Y assumption include
Employees have a natural tendency to work and play.Employees have self-direction and self-discipline in pursuit of organizational goals without external coercion or threats.An average person seeks and accepts responsibilities. Employee loyalty and commitment is as a result of job satisfaction and job reward.Based on your understanding of the Phillips curve, explain what happens to actual inflation (relative to expected inflation) when the actual unemployment rate is either above or below the natural rate of unemployment?
Explanation:
The concept of the Philips curve was given by A.W Philips. It states that economic growth is related to employment growth and inflation. In other words, as the economy expands, the more jobs will be created and unemployment will decline but the inflation will increase.
So there is a kind of trade-off between inflation and unemployment.
When the unemployment rate is lower than the natural rate of unemployment the inflation is higher than expected. There is an inverse relationship between unemployment and inflation which is indicated by a downward-sloping demand curve.
When unemployment will be higher or above the natural rate the actual inflation will be lower than expected.
You are estimating your company's external financing needs for the next year. At the end of the year you expect that owners' equity will be $80 million, total assets will amount to $170 million, and total liabilities will be $70 million. How much will your firm need to borrow, or otherwise acquire, from outside sources during the year?A. $20 millionB. $70 millionC. $150 millionD. $160 millionE. $180 millionF. None of the above.
Answer:
A. $20 million
Explanation:
The balance sheet comprises of the assets and liabilities. With the help of the accounting equation, the total assets are equal to the total liabilities including stockholder's equity.
In mathematically,
Total assets = Total liabilities + Shareholder equity
$170 million = $70 million + $80 million + borrowed amount
$170 million = $150 million + borrowed amount
So, the borrowed amount would equal tp
= $170 million - $150 million
= $20 million
One year ago, you purchased a 6 percent coupon bond with a face value of $1,000 when it was selling for 98.6 percent of par. Today, you sold this bond for 101.2 percent of par.
What is your total dollar return on this investment?
$86$74$82$60$64
Answer:
option (A) $86
Explanation:
Data provided in the question:
Coupon rate = 6%
Face value of bonds = $1,000
Purchasing price (i.e the selling percentage at the time of purchase )
= 98.6% of par
Selling price = 101.2% of par
Thus,
Annual Coupon payment = Face value × Coupon rate
= $1,000 × 6%
= $60
Now,
Purchase price = $1,000 × 98.60%
= $986
Sales price = Face value of bonds × Selling price
= $1,000 × 101.20%
= $1,012
Therefore,
Total dollar Return
= Sales price + Annual Coupon payment - Purchase price
= $1,012 + $60 - $986
= $86
Hence,
The correct answer is option (A) $86
Monroe Construction Company uses the percentage-of-completion method of accounting. In 2013, Monroe began work on a contract it had received which provided for a contract price of $20,000,000. Other details follow: 2013 Costs incurred during the year $9,600,000 Estimated costs to complete as of December 31 $6,400,000 Billings during the year $8,800,000 Collections during the year $5,200,000 What should be the gross profit recognized in 2013?
Answer:
$2,400,000
Explanation:
Costs incurred during 2013 + estimated costs to complete (2014) = $9,600,000 + 6,400,000 = $16,000,000
The gross profit for all the project should be $20,000,000 - $16,000,000 = $4,000,000.
The $4,000,000 gross profit should be distributed as follows:
2013 = ($9,600,000 / $16,000,000) x $4,000,000 = $2,400,000
2014 = ($6,400,000 / $16,000,000) x $4,000,000 = $1,600,000
Which term refers to selling commodities of similar grade and quality to two or more different buyers at different prices, within a reasonably short time, where the result would be to substantially lessen competition?
Answer:
Price discrimination
Explanation:
Price discrimination is a method used by various firms; it is a selling system that charges clients different costs for similar items. They charge clients different prices and the prices depend on whatever the customer can pay. In unmodified price discrimination, the dealer charges every client the most extreme value the individual customer can pay. Under the Robinson-Patman Act of 1936, it is illegal to sell the same quality of products at different prices.
Price discrimination refers to the practice of selling similar products to different buyers at varying prices in a manner that could lessen competition, potentially violating antitrust laws and leading to unfair market dominance or a monopoly.
The practice of selling commodities of similar grade and quality to two or more different buyers at different prices, where the outcome could substantially lessen competition, is known as price discrimination. This act can violate antitrust laws if it results in unfair competition or harm to the consumer.
Antitrust laws, such as Section 2 of the Sherman Act, are intended to prevent actions that could reduce competition, which includes prohibiting price discrimination that could lead to such an effect. The law is concerned with maintaining fair and competitive markets, stating that competition has been harmed if firms can increase prices significantly due to reduced competition.
Price discrimination may involve different pricing strategies such as charging different prices based on geographical location, quantity of purchase, or for reasons not related to cost differences. It may also result in firms exerting more control over the market and potentially leading to a monopoly situation. In a healthy competitive market, similar goods would typically sell at identical or near-identical prices, a principle that can be upset by discriminatory pricing practices.
Unemployment insurance
a. increases search effort which decreases unemployment.
b. reduces search effort which lowers unemployment.
c. increases search effort which raises unemployment.
d. reduces search effort which raises unemployment.
Answer: The correct answer is "d. reduces search effort which raises unemployment.".
Explanation: Unemployment insurance reduces search effort which raises unemployment because the unemployed who receive this unemployment insurance, lose motivation to look for work because they are calm knowing that they will receive unemployment insurance, which causes unemployment to increase.
A manager requires all job applicants to complete an online questionnaire that claims to tell the manager if each applicant is an extrovert or an introvert. In which aspect of the HRM process is this manger engaging?A) Bacground information
B) Reference checking
C) Ability testing
D) Personality testing
Answer:
D) Personality testing
Explanation:
Personality testing refers to assessing people to define their qualities and characteristics. So, the HRM process in which the manager is engaging is peronality testing because the manager is trying to know if the applicant is extrovert or introvert which is a caracteristic of the personality.
The major issues in the __________ stage of team development concern how the tasks and responsibilities will be divided among members and how members will evaluate each other’s performance.
Answer:
3rd stage or Norming stage of group development.
Explanation:
3rd stage or Norming stage of group development.
In this stage responsibilities among group member is divided on the basis of their skills. During this stage members start to cooperate with other co members. A bonding among the members is start to developed which result in understanding each other contribution and identity. The main advantage of this understanding is that conflicts and misunderstanding issues has been resolved at faster rate.
What is budgetary control? a) The degree to which the CFO controls the budget. b) Another name for a flexible budget. c) The use of budgets in controlling operations. d) The process of providing information on budget differences to lower level managers.
Answer: Option (C)
Explanation:
Budgetary control is referred ton as the system of conduct which is further used in order to ensure that a company's revenues and their expenditures conform closely to their financial plan. This system usually involves setting up the personal objectives for the managers which are mostly inclined towards the budget, alongside a set of the rewards which are further triggered when these objectives are accomplished.
Reusable modules, which are represented in the structure chart as rectangles with vertical lines on both sides, may often appear several times in a structure chart. These are called _____ modules.
Answer:
library
Explanation:
Because it is a reusable code and can be invoked from more than one point.
If ABC corporation paid a dividend of $6 per share last year. The stock currently sells for $80 per share. You estimate that the dividend will grow steadily at a rate of 6% per year into the indefinite future. What is the cost of equity?
a. 7.5%
b. 7.95%
c. 11.50%
d. 13.50%
e. 13.95%
Answer:
option (e) 13.95%
Explanation:
Data provided in the question:
Dividend paid, D0 = $6 per share
Current selling price = $80 per share
Dividend growth rate = 6% = 0.06
Now,
Cost of equity = [ D1 ÷ Current price] + Growth rate
= [ ( D0 × (1 + g) ) ÷ $80 ] + 0.06
= [ ( $6 × (1 + 0.06) ) ÷ $80 ] + 0.06
= [ 6.36 ÷ $80 ] + 0.06
= 0.1395
or
= 0.1395 × 100%
= 13.95%
Hence,
The correct answer is option (e) 13.95%
A product's package, guarantees, mass-media advertising for the product, direct marketing for the product, and the selection of distribution channels to move the product from the manufacturer to the consumer are examples of ________.
a. policy factors
b. output factors
c. process factors
d. marketing inputs
e. sociocultural inputs
Answer:
The correct answer is D) marketing inputs.
Explanation:
Marketing inputs: Marketing activities in the company are a direct attempt to reach, inform and persuade consumers to buy and use their products.
Input is a term applied in the field more than all economic and marketing, but basically it can be said that an input is any element that represents a fraction in the development of a product, understood as a product, everything that is produced for a given end. An input is all that material used in the manufacture of something larger, usually we associate it with the basic diet, this is because the ingredient of a food, however edible, individually, does not represent a complete food bolus, with a Standard regulation of each of its components, so it is considered as an input, as part of a whole.
What is the profitminusmaximizing rule for a monopolistically competitive firm? A. to produce a quantity that maximizes total revenue B. to produce a quantity such that marginal revenue equals marginal cost C. to produce a quantity that maximizes market share D. to produce a quantity such that price equals marginal cost
Answer:
The correct answer is option B.
Explanation:
Monopolistic competition is a market structure in which there is a large number of firms selling differentiated products which are close substitutes. Because of product differentiation, the firms are able to make their own prices.
A monopolistic competitive firm faces a downward-sloping demand curve. The firm is able to maximize profit by producing the output level where the marginal revenue is equal to marginal cost.
The price will be fixed above this point on the demand curve.
This profit-maximizing level of output is smaller than the socially optimal level and the price is higher than socially optimal. So a deadweight loss is created as resources are not allocated efficiently.
Some economists argue that competitive price-searcher markets are inefficient because
Answer:
A competitive price-searcher market is a market where there are low entry or exit barriers, and the suppliers can determine the price of their products. Some economists believe that this type of market is inefficient because the suppliers are not able to sell enough output in order to minimize their average costs. Since the demand is very elastic in price searcher markets, any price change will cause a drastic change in the quantity demanded.
Price searcher markets share a lot of similarities with perfect competition markets, the main difference is that suppliers and consumers are not price takers. This means that any supplier can change their sales output by changing their price, which leads to greater competition.
Suppose that shortly after graduating from college you decide to start your own business. Assuming you are starting a small business and realize that you need someone with particular expertise or business skills, which category of firm are you most likely to start?A. Sole proprietorship. B. Partnership. C. Corporation. D. All of the above are equally alike. E. A and C are more likely than B.
Answer:
Partnership
Explanation:
A partnership is a business established by two or more people, who are co-owners of the partnership.
Some of the advantages of setting a partnership over a sole proprietorship are:
greater financial capability since all the co-owners invest in the partnership instead of just the sole proprietorthe skills and expertise of the partners can be combinedSome of the advantages of setting a partnership over a corporation are:
Much easier and less expensive to setup and organize A partnership is a more personal business, it's your business, not someone else'sJason rents rooms in his hotel for an average of $100 per night. The variable cost per rented room is $20. His fixed costs are $100,000 and his target profit is $20,000. For Jason, to earn his target profit, he will need to rent out ________ rooms.
A) 100
B) 20,000
C) 1,000
D) 1,500
E) It cannot be determined from the information provided.
Answer:
D) 1,500
Explanation:
rent per room =$100 dollars
variable cost= $ 20 dollars
fixed cost =$ 100,000.00
desired profits=$ 20,000.00
volume(V) to meet profit target;
Contribution margin per sale= $100-$20= $80
Profits = revenue-cost
=$20,000= Vx$80-$100,000
=20,000=v80-100000
v80=100,000.00+20,000
v80=120,000
v= 120,000/80
Volume =1,500
On April 16, 2018, Rodriguez Corporation reacquired 12,000 shares of its own $10 par stock for $660,000 cash. On November 4, 2019, 1,000 of the treasury shares were reissued at a price of $65 per share. The journal entry to record the reissuance of the 1,000 shares of stock on November 4 includes a:__________.
a) Credit to additional Paid In Capital: Treasury Stock Transactions of $10,000.
b) Credit to Treasury Stock reissued of $65,000
c) Credit to Gain on Treasury Stock transactions of $10,000.
d) Credit to Common Stock of $10,000
Answer:
The answer is a) Credit to additional Paid In Capital: Treasury Stock Transactions of $10,000.
Explanation:
The repurchased price per share in April 16,2018 is equal to: 660,000/12,000 = $55 per share;
Thus, once the reissued of these 12,000 repurchased shared took place, common stock account will be credited at the amount equal to 55 x Number of share reissued. In case the reissued price is higher than $55, the surplus amount will be Credited into Paid-in Common share account to present the difference between cash receipt and common share recorded; in case reissued price is lower than $55, Retained earning account will be debited to present the difference between cash receipt and common share recorded
As a result, the reissued of share on November 4,2019 will include a $10,00 credited to additional Paid In Capital; calculated as (65-55) x 1,000 = $10,000.