A is corrent. The change in the account resulting from each transaction described should be identified| | | Effect | | January 4 | - Shares issued at par | $ 0 | | April 8 | - Shares issued at $2 above par (100,000 × $2) | 200,000 | | June 9 | - Shares issued at $5 above par (30,000 × $5) | 150,000 | | July 29 | - Purchased treasury shares | 0 | | December 31 | - Sold at $4 above cost (50,000 × $4) | 200,000 | | Change in | “capital in excess of par” | $550,000 |
Since Elaine uses the cost method, there is no effect on “capital in excess of par” when the shares are purchased, but the account is increased when the treasury shares are reissued above cost. Remember: “capital in excess of par value” includes APIC from all sources.B is incorrect. The change in the account resulting from each transaction described should be identified| | | Effect | | January 4 | - Shares issued at par | $ 0 | | April 8 | - Shares issued at $2 above par (100,000 × $2) | 200,000 | | June 9 | - Shares issued at $5 above par (30,000 × $5) | 150,000 | | July 29 | - Purchased treasury shares | 0 | | December 31 | - Sold at $4 above cost (50,000 × $4) | 200,000 | | Change in | “capital in excess of par” | $550,000 |
Since Elaine uses the cost method, there is no effect on “capital in excess of par” when the shares are purchased, but the account is increased when the treasury shares are reissued above cost. Remember: “capital in excess of par value” includes APIC from all sources.C is incorrect. The change in the account resulting from each transaction described should be identified| | | Effect | | January 4 | - Shares issued at par | $ 0 | | April 8 | - Shares issued at $2 above par (100,000 × $2) | 200,000 | | June 9 | - Shares issued at $5 above par (30,000 × $5) | 150,000 | | July 29 | - Purchased treasury shares | 0 | | December 31 | - Sold at $4 above cost (50,000 × $4) | 200,000 | | Change in | “capital in excess of par” | $550,000 |
Since Elaine uses the cost method, there is no effect on “capital in excess of par” when the shares are purchased, but the account is increased when the treasury shares are reissued above cost. Remember: “capital in excess of par value” includes APIC from all sources.D is incorrect. The change in the account resulting from each transaction described should be identified| | | Effect | | January 4 | - Shares issued at par | $ 0 | | April 8 | - Shares issued at $2 above par (100,000 × $2) | 200,000 | | June 9 | - Shares issued at $5 above par (30,000 × $5) | 150,000 | | July 29 | - Purchased treasury shares | 0 | | December 31 | - Sold at $4 above cost (50,000 × $4) | 200,000 | | Change in | “capital in excess of par” | $550,000 |
Since Elaine uses the cost method, there is no effect on “capital in excess of par” when the shares are purchased, but the account is increased when the treasury shares are reissued above cost. Remember: “capital in excess of par value” includes APIC from all sources. |
