Reference no: EM132480589

Question 1 - A company issues 10,000 shares of $10 par value common stock for $22 in cash per share. Later, the company buys back 1,000 shares of this stock for the same $22 per share and records it using the par value method. Subsequently, the company sells 100 shares of this treasury stock for $23 per share. What should the company report as additional paid-in capital in the stockholders' equity section of its balance sheet?

A. $108,100

B. $121,300

C. $109,300

D. $120,000

Question 2 - A company issues 10,000 shares of its own $10 par value common stock to the public for $19 per share. Later, 1,000 of these shares are bought for $21 per share as treasury stock. Which of the following statements is true?

A. The par value method and the cost method have the same total impact on stockholders equity

B. The cost of the treasury stock is reported by the company as an asset on its balance sheet

C. Because this is a stock transaction, retained earnings cannot be affected by a re-issuance of these shares

D. Losses on the resale of these shares would impact reported net income for the year although gains would not