Question
At its date of incorporation, Sheridan Company issued 118000 shares of its $10 par common stock at $13 per share. During the current year, Sheridan
At its date of incorporation, Sheridan Company issued 118000 shares of its $10 par common stock at $13 per share. During the current year, Sheridan acquired 18000 shares of its common stock at a price of $18 per share and accounted for them by the cost method. Subsequently, these shares were reissued at a price of $14 per share. There have been no other issuances or acquisitions of its own common stock. What effect does the reissuance of the stock have on the following accounts?
| Retained Earnings |
| Additional Paid-in Capital |
No effect |
| No effect |
Decrease |
| No effect |
Decrease |
| Decrease |
No effect |
| Decrease |
2.
Waterway Industries has 502000 shares of $10 par value common stock outstanding. During the year Waterway declared a 13% stock dividend when the market price of the stock was $36 per share. Three months later Waterway declared a $0.60 per share cash dividend. As a result of the dividends declared during the year, retained earnings decreased by
$2689716
$ 496980
$ 473300
$2349360
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