1) On incorporation, Dee Inc. issued stock at a price in excess of its par value. No other stock transactions occurred except treasury stock was acquired for an amount exceeding this issue price. If Dee, immediately retired the stocks acquired, what is the effect of the acquisition on the following?

Net Common Stock Additional Paid-in Capital Retained Earnings

-Decrease, Decrease, Decrease -No effect, decrease, No effect -Decrease, No effect, Decrease -No effect, Decrease, Decrease

3) What is the corporations legal capital?

-All of the above statements would describe the concept of legal capital. -It is the portion of the paid-in capital arising from the issuance of capital stock that cannot be returned to the stockholders in any form during the lifetime of the corporation. -In case of par value stock, legal capital is the aggregate par value of all shares issued and subscribed. -In case of no-par value stock, legal capital is the aggregate stated value of shares issued and subscribed plus any excess over stated value.

4) The retirement of the treasury shares

-Decreases shares issued -Decreases share outstanding -Decreases shares authorized -Has no effect on shares issued

5) When collectability is reasonably assured, the excess of the subscription price over the stated value of the no par ordinary shares subscribed should be recorded as

-Share premium when the subscription is recorded -No par ordinary share -Share premium when the subscription is collected -Share premium when the ordinary shares are issued