Question

On March I, 2009, the Miranda Company purchased 2,000 shares of its common stock for $25 per share for
the treasury. On July I, 2009, 1,000 of the treasury shares were sold for $30 per share. On October I, 2009, 1,000 of the treasury shares were sold at $15 per share.

On January I, 2009, Miranda's balance in Retained Earnings was $100,000. During the year, the company
had net income of $20,000 and paid dividends of $5,000

43. Refer to question #56. By what amount did Treasury Stock change, if at all? (If the account  
balance or amount did not change, state your answer as "$0.")

44. Refer to question #56. By what amount did Total Equity change, if at all? (If the account
balance or amount did not change, state your answer as "$0.")

45. Which of the following is true regarding the sale of treasury stock on October I?
a. Treasury stock decreased and Total Equity decreased
b. Treasury stock decreased and Total Equity increased
c. Treasury stock increased and Total Equity decreased
d. Treasury stock increased and Total Equity increased
e. None of the above

46. Refer to question #59. By what amount did Treasury Stock change, if at all? (If the account
balance or amount did not change, state your answer as "$0.")

47 Refer to question #59. By what amount did Total Equity change, if at all? (If the account  
balance or amount did not change, state your answer as "$0.")

48. What is the balance in Retained Earnings at the end of the year?

Use the following information to answer the next 10 questions:
A company with I 00,000 authorized shares of $4 par common stock issued 50,000 shares at $9 per share Subsequently, the company declared and issued a I0% stock dividend. The market price of the shares is $20 per share.

49. What is the effect of the dividend on Retained Earnings?
a. Retained earnings decreased
b. Retained earnings increased
c. Retained earnings remained the same
d. None of the above

50. Refer to the previous question. By what amount did Retained Earnings change, if at all? (If the account balance or
amount did not change,_ state your answer·as "$0.")

51. What is the effect of the dividend on Common Stock?
a. Common Stock decreased
b. Common Stock increased
c. Common Stock remained the same
d. None of the above

54. Refer to the previous question. By what amount did Paid-in Capital change, if at all? (If the account balance or amount did not change, state your answer as "$0.")

55. What is the effect of the dividend on the number of shares outstanding?
a. The number decreased
b. The number increased
c. The number remained·the same
d. None of the above

56. Refer to the previous question. By what amount did the number of shares outstanding change, if at all? (If the account
balance or amount did not change, state your answer as "$0.")

57. What is the effect of the dividend on total equity and total assets?
a. Total equity decreased and total assets decreased
b. Total equity decreased and total assets increased
c. Total equity increased and total assets decreased
d. Total equity increased and total assets increased
e. None of the above

Answer 1

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45. Which of the following is true regarding the sale of treasury stock on October I?
	b. Treasury stock decreased and Total Equity increased
49. What is the effect of the dividend on Retained Earnings?
	a. Retained earnings decreased
50. Refer to the previous question.
	By 5000 as dividend in previous que is 5000
51. What is the effect of the dividend on Common Stock?
	c. Common Stock remained the same
54.	No Change
55. What is the effect of the dividend on the number of shares outstanding?
	c. The number remained the same
56.	No Change
57. What is the effect of the dividend on total equity and total assets?
	a. Total equity decreased and total assets decreased
	(Retained Earning and Cash both will go down)