Module 15. Stockholders' Equity 16. Victor Corporation was organized on January 2 year 1, with 100,000 authorized shares of $10 our value como ock. During year I Victor had the following capital transactions: January 5 issued 75,000 shares at $14 per share. December 27-purchased 5,000 shares at Sil per share. Victor used the par value method to record the purchase of the treasury shares. What would be the balance in the paid-in capital from treasury stock account at December 31. year 1? 20. The following accounts were those pred Luna Corp's balance sheet at December 31. Available for sale securities (market value $140,000) Preferred stock, 520 par value, 20,000 shares issued and outstanding Additional paid in capital on preferred stock 30.00 Retained earnings 9000 6000 som nex "tockhol Investme b. 55.000 c. $15.000 d. $20.00 Exercis 1000 st 17. On incorporation, Dee Inc issued common 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 uses the paryalue method of accounting for treasury stock appropriate for retired stock. what is the effect of the acquisition on the following? Net common Additional aid Retained stock In capital earnings No effect Decrease No effect b Decrease Decrease Decrease & Decrease No effect Decrease d No effect Decrease Decrease 1,000 poroda 1000 x I bonds 1000 x Lissued 18. Posy Corp. acquired treasury shares at an amount greater than their par value, but less than their original issue price. Compared to the cost method of accounting for treasury stock, does the par value method report a greater amount for additional paid in capital and a greater amount for retained eamings? Additional pald.in capital Retained earnings On January 20, year 2. Luna exchanged all of the available for-sale securities for 5,000 shares of Luna's preferred sock Market values at the date of the exchange were $150.000 for the available for sale securities and $30 per share for the preferred stock. The 5,000 shares of preferred Mock were retired immediately after the exchange. Which of the follow journal entries should Luna record in connection with this transaction? Debit Credit Preferred stock 100,000 Additional paid-in capital on preferred stock 7,500 Retained earnings 42,500 Available for sale securities . 80.000 Gain on change of Securities 10.000 Preferred stock 100,000 Additional paid-in capital on preferred stock 30,000 Available for sale securities 80,000 Additional paid in capital from retirement of preferred stock 50.000 c. Preferred stock 150,000 Available for sale securities 0.000 Additional paid in capital on preferred stock 70,000 d. Preferred stock 150.000 Available for sale securities 80,000 Gain on exchange of securities 70,000 21. On December 31, year 1. Pack Com's board of directors canceled 50.000 shares of $2.50 par value common stock held in treasury at an average cost of $13 per share. Before recording the cancellation of the treasury wock, Pack had the following balances in its stockholders' Equity 40,000 E Retirement of Stock 19. In year 1. Rona Corp isund 5,000 shares of $10 par value common stock for $100 per share. In year 3, Rona reacquired 2,000 of its shares a $150 per share from the state of one of its deceased officers and immediately canceled these 2,000 shares. Ron uses the cost method in accounting for its treasury stock transactions. In connection with the retirement of these 2.000 shares, Rona should debit Additional paid-in capital Retained earnings $20,000 5280.000 STO SIND 000 $$40.000 Additional paid in capital 750.000 Retained earnings 900.000 Treasury stock, cost 650.000 In its balance sheet al Desember 31, vear 1 Pack should report a common stock balance of $0 h $250,000 SI 000 $100.000 Commor Cach