4. Choco, Inc., initially issued 500,000 shares of $1 par yalive stock tor 2013,
ID: 2446136 • Letter: 4
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4. Choco, Inc., initially issued 500,000 shares of $1 par yalive stock tor 2013, the company repurchased 40,000 shares tor $200, 3, the compyhares of $1 par value stock for $1,500,000 in 2011. In 1n 2014(Too?the ,0 , 2014 repurchased shares were resold for $$5,000. In its balance sheet dated Choco, Inc.'s treasury stock account shows a balance of? A· $200,000. B. C. D. were resold for $55,000. In its balance sheet dated December 31 $165,000 $145,000. $1 pal 496, At the beginning of 2012, choco Corporation issued 100,000 shares cumulative, preferred stock for $20 per share. Ne common shareholders since inningfof 2012. Vhat amount of dividends will a in December 31,2015 i Choco pays $40,000 in dividends? A. $16,000 B. $140. C. D. 6. Choco Services gragted 600,000 shares of its $2 par common shares to executives as a t is terminated wituh ive yeary The common stock award, subject to shares have a market price of $.15 per share on the grant date.Ilgnoring taxes, what is the compensation expense that Choco Service record each year after the shares are granted to 100 boo 315 executives? $9,000,000. 200,000. A. D. $240,000.Explanation / Answer
4. Treasury stock will be debited with $200,000 on its purchase. On sale, 7,000 shares were sold. Cost of these 7,000 shares = 7,000*(200,000/40,000) = $35,000. Total sale amount = 55,000. Balance 55,000 - 35,000 = $20,000 will be credited to additional paid in capital. Treasury stock will be credited with $35,000 - the cost.
Balance in treasury stock = 200,000 (Dr) - 35,000 (Cr) = $165,000 debit balance. Answer is option "c".
5.face value of 3,500 shares = 3500*$1 = $3,500. dividend amount = face value*4% = 3500*4% = $140 per year. Duration between 2012 to 2015 = 4 years. Dividend for 4 years = $140*4 = $560. Answer is option "d".
6. number of shares = 600,000.
Total compensation expense = fair value per share*number of shares = $15*600,000 = $9,000,000
vesting period = 5 years. expense amount recorded per year = total compensation expense/vesting period = $9,000,000/5 years = $1,800,000 per year. answer is option "c".
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