Chapter 7 Flashcards
1
Q
Treasury stock was sold at price that exceeds its cost. How should be recorded this excess ?
A
There is no gain or loss on the purchase and sale of treasury stock. Any difference goes to “paid-in capital”. If there is not enough paid-in capital to absorb a loss, it would debited (subtracted) from Retained Earnings.
2
Q
What retained earnings appropriation can be used to:
A
RE appropriation can be used to restrict earnings available for dividends. RE appropriation debits (reduces) “unappropriated RE” and sets up (credits) “appropriated RE”. It does not affect IS.
3
Q
Book value per common share formula
A
Common stockholders equity/ commons shares outstanding
