Question 18 (1 point) Watkins, Inc. paid $48,000 to buy back 9,000 shares of its
ID: 2424185 • Letter: Q
Question
Question 18 (1 point)
Watkins, Inc. paid $48,000 to buy back 9,000 shares of its $1 par value common stock. This stock was sold later at a selling price of $6 per share. The entry to record the sale includes a:
Question 18 options:
debit to Paid-in Capital from Treasury Stock for $45,000.
debit to Retained Earnings for $48,000.
credit to Common Stock for $6,000.
credit to Paid-in Capital from Treasury Stock for $6,000.
Question 22 (1 point)
Which of the following may either increase or decrease retained earnings?
Question 22 options:
Disposals of treasury stock.
Net income.
Stock dividends.
Prior period adjustments.
Question 25 (1 point)
The preparation of consolidated financial statements are not useful to:
Question 25 options:
creditors of the company.
the parent company.
the subsidiary company.
only the parent and the subsidiary company.
Question 31 (1 point)
Adam Corporation purchased 3,000 shares of Ozark Company's common stock for $12 per share as a long-term available-for-sale investment on June 30, 2014. Ozark declared and paid a cash dividend of $1.00 per share on its common stock on September 30, and had a closing fair value of $18 per share on December 31. Assuming this investment is appropriately accounted for using the fair value method, it will increase Adam's 2014 income before taxes by (do not show your work; just enter your answer):
debit to Paid-in Capital from Treasury Stock for $45,000.
debit to Retained Earnings for $48,000.
credit to Common Stock for $6,000.
credit to Paid-in Capital from Treasury Stock for $6,000.
Question 22 (1 point)
Which of the following may either increase or decrease retained earnings?
Question 22 options:
Disposals of treasury stock.
Net income.
Stock dividends.
Prior period adjustments.
Question 25 (1 point)
The preparation of consolidated financial statements are not useful to:
Question 25 options:
creditors of the company.
the parent company.
the subsidiary company.
only the parent and the subsidiary company.
Question 31 (1 point)
Adam Corporation purchased 3,000 shares of Ozark Company's common stock for $12 per share as a long-term available-for-sale investment on June 30, 2014. Ozark declared and paid a cash dividend of $1.00 per share on its common stock on September 30, and had a closing fair value of $18 per share on December 31. Assuming this investment is appropriately accounted for using the fair value method, it will increase Adam's 2014 income before taxes by (do not show your work; just enter your answer):
Explanation / Answer
Answer 22.
Net Income
Net income will affect an increase or decrease in retained earnings.
Retained earnings = Beginning balance + Net income - Dividends
Answer 25.
The preparation of consolidated financial statements are not useful to creditors of company.
As the parent company, subsidiary company individually prepare the financial statements and then consolidate them.
Answer 18.
Credit to paid in capital from treasury stock for $6000.
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