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When the selling price of treasury stock is greater than its cost the company credits the difference to?
Treasury Stock
The journal entry to record the purchase of treasury stock will cause total stockholders' equity to decrease by the amount of the cost of the treasury stock?
true!
Assume the cost method is used to account for treasury stock What should the gain on the sale of treasury stock be classified as?
According to US GAAP, any gains in the sale of treasury stock cannot be recognized as income throught the income statement but must be run through paid in capital.
Would a purchase of treasury stock affect retained earnings?
Answer:The purchase of treasury stock does not affect retained earnings. When the company owns treasury stock, then 'treasury stock' has a debit balance. It is nevertheless presented under equity, with a negative sign.(Technically, when a T-account switches from debit to credit - or the other way around - the sign flips.)Nevertheless, a subsequent sale of treasury stock can affect retained earnings when the amount received is below the cost (a loss is made). This loss is subtracted from retained earnings if there are no cumulative gains on prior sales of treasury stock.
What effect does the purchase of treasury stock have on net income?
Purchase of treasury stock has no effect on the net income of a business. The purchase may affect cash flow of the business. No profit or loss is claimed when shares are re-issued at above or below cost.
If 20000 shares are reacquired as treasury shares at cost of 12.00 per share and par value is 10.00 per share what should be the journal entry?
debit treasury stock 200000debit premium 40000credit cash 240000
How much did the 2003 Purple Heart Stamp cost?
37 cents until it was reissued for 41 cents.
How do you calculate a direct cost of sales in a business plan?
Cost of sales = opening stock + purchases-closing stock Cost of sales = opening stock + purchases-closing stock
How do you calculate the cost of preferred stock?
stock turnover rate is calculated as: =cost of good sold/average stock
What is the cost basis for a stock gift?
The cost basis for a stock gift is the original price paid for the stock by the person who gifted it.
When treasury shares are resold at a price below cost?
When treasury shares are resold at a price below cost, the difference between the resale price and the original purchase price typically results in a reduction of additional paid-in capital or retained earnings, depending on the company's accounting policies. This transaction does not affect the company's net income but can impact shareholders' equity. The loss on resale reflects a decrease in the value of the shares held as treasury stock. Companies often use treasury shares for various purposes, including employee compensation plans or raising capital, so careful management of these shares is essential.
What effect does a closing stock have on cost of sales?
Closing stock affects the cost of sales by reducing it. In calculating cost of sales, the formula is: Opening Stock + Purchases - Closing Stock = Cost of Sales. Thus, a higher closing stock means less cost of goods sold, while a lower closing stock increases the cost of sales. This relationship highlights the importance of inventory management in financial reporting.
