21) Suppose 100 common shares are issued for $12.50 per share. The entry to record this issuance includes a:
A) credit to Retained Earnings for $1,250
B) credit to Common shares for $1,250
C) credit to Contributed Surplus for $250
D) debit to Preferred Shares for $1,000
22) When 1,000 common shares are sold at $3.75 per share, Share Capital will:
A) increase $1,000
B) increase $2,750
C) increase $3,750
D) not be affected
23) Which statement below regarding a share repurchase is true?
A) A share repurchase grows a company's assets and equity.
B) The company repurchasing shares is not entitled to vote.
C) Repurchasing shares shrinks a company's assets and equity.
D) Repurchasing shares increases retained earnings.
24) A share repurchase causes:
A) issued shares to be less than outstanding shares
B) outstanding shares to be less than issued shares
C) issued shares to be less than repurchased shares
D) repurchased shares to be greater than outstanding shares
25) The number of repurchased shares plus the number of shares outstanding equals:
A) the number of shares authorized
B) the number of shares issued
C) the number of shares authorized that have not been issued
D) the number of shares issued that have not been reacquired by the company
26) A company may repurchase their own shares for the following reasons
except:
A) the company has issued all its authorized shares and needs the repurchased shares for distributions to employees under stock purchase plans
B) the company needs more financing
C) management wants to avoid a takeover by an outside party
D) the purchase may help support the share's current market price by decreasing the supply of shares available to the public
27) If repurchased shares are reissued:
A) Retained Earnings is increased
B) Common Shares is increased
C) Contributed Surplus - Share Repurchase is decreased
D) Common Shares is decreased
28) If repurchased shares are reissued at a price below their repurchase cost, the difference is:
A) credited to Contributed Surplus - Share Repurchase
B) debited to Loss on Sale of Repurchased Shares
C) credited to Common Shares
D) ignored
29) A retirement of common shares:
A) decreases the number of common shares issued
B) reduces the balance in the common shares account
C) produces a gain or loss reported on the income statement
D) decreases the number of common shares issued and reduces the balance in the common shares account
30) Following is the shareholders' equity section of the balance sheet of Easypix Corporation:
Share capital:
Preferred shares, 80,000 authorized, 50,000 issued$ 5,000,000
Common shares, 3,000,000 authorized, 1,500,000 shares issued 7,500,000
Total share capital$12,500,000
Retained earnings 4,800,000
Total shareholders' equity$17,300,000
The entry to record Easypix's repurchase of 15,000 of its common shares at $12.50 per share includes:
A) debit to Retained Earnings for $75,000
B) a debit to Common Shares for $75,000
C) a debit to Contributed Surplus - Share Repurchase for $187,500
D) a credit to Common Shares for $112,500