Question

Charmed, Inc. has 7,000 shares of treasury stock which it purchased for $12?/share. It later resold 2,500 of those shares for $20 /share. The amount to be credited to Paid?in Capital?Treasury Stock? is:

A.

$84,000.

B.

$56,000.

C.

$20,000.

D.

$50,000.

The Betta Group had net income of $39,000. Accounts Receivable increased by $5,500?; accounts payable decreased by $3,500. Depreciation expense for the year was $ 500 Additional transactions? include: the purchase of land in exchange for stock $50,000?; the sale of treasury stock $4,000?; issued bonds $3,000?; acquired a building by issuing a note $80,000. Using the indirect? method, the net increase? (decrease) in cash for the year? is:

A.

$37,500

B.

?$(94,500?)

C.

$30,500

D.

?$(21,500?)

Answer 1

1) Treasury stock sale journal entry :

Date	accounts & explanation	debit	credit
	Cash (2500*20)	50000
	Treasury stock (2500*12)		30000
	Paid in capital from sale of treasury stock		20000

So answer is c) $20000

2) Statement of cash flow :

Cash flow from operating activities
Net income	39000
Adjustment to reconcile net income
Depreciation expense	500
Account receivable increase	-5500
Account payable decrease	-3500
Net cash flow from operating activities	30500
Cash flow from investing activities
Cash flow from financing activities
Sale of treasury stock	4000
Issue bonds	3000
Net cash flow from financing activities	7000
Net cash increase (decrease) in cash	37500

So answer is a) $37500