Reference no: EM132972173

Problem 1: Assume a corporation has no contributed surplus booked. When shares are reacquired at a cost greater than their original issue price and cancelled, what account(s) should be debited?

Select one:

a. The share account for the total cost.

b. The share account for the original issue price and contributed surplus for the difference.

c. The share account for the average per share amount and retained earnings for the difference.

d. The share account for the average per share amount and a loss account for the addifference.

e. none of the above

Problem 2: When applying the treasury shares method for diluted earnings per share, the price of the common shares used for the assumed repurchase is the

Select one:

a. market price at the end of the year.

b. market price at the beginning of the year.

c. market price at the time the options or warrants were granted.

d. average market price during the year.

e. market price at the time the options or warrants are to be exercised.