Choose the correct answer

6. Glavine Company issues 6,000 shares of its $5 par value common stock having a fair value of $25 per share and 9,000 shares of its $15 par value preferred stock having a fair value of $20 per share for a lump sum of $297,000. The proceeds allocated to the common stock is

a. $118,800

b. $135,000

c. $150,000

d. $162,000

=(6000*25 /6000*25+9000*20)297000 =

7. In January 2014, Finley Corporation, a newly formed company, issued 10,000 shares of its $10 par common stock for $15 per share. On July 1, 2014, Finley Corporation reacquired 1,000 shares of its outstanding stock for $12 per share. The acquisition of these treasury shares

a. decreased total stockholders' equity.

b. increased total stockholders' equity.

c. did not change total stockholders' equity.

d. decreased the number of issued shares.

8. When treasury stock is purchased for more than the par value of the stock and the cost method is used to account for treasury stock, what account(s) should be debited?

a. Treasury stock for the par value and paid-in capital in excess of par for the excess of the purchase price over the par value.

b. Paid-in capital in excess of par for the purchase price.

c. Treasury stock for the purchase price.

d. Treasury stock for the par value and retained earnings for the excess of the purchase price over the par value.

9. Gains" on sales of treasury stock (using the cost method) should be credited to

a. paid-in capital from treasury stock.

b. capital stock.

c. retained earnings.

d. other income.

10. Which of the following features of preferred stock makes it more like a debt than an equity instrument?

a. Participating

b. Voting

c. Redeemable

d. Noncumulative