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1. If a company repurchases 1,000 shares of common stock at a market price of $40 per share, which of the following is the correct balance sheet effect?

A. Decrease cash by $40,000 and decrease contributed capital by $40,000

B. Decrease cash by $40,000 and decrease earned capital by $40,000

C. Increase stock revenues by $40,000

D. Stock repurchases are not reported on the balance sheet

E. None of the above

2. On its 2010 balance sheet, Lowell Co, reports treasury stock at cost of $1,000 million. The company has a total of 1,000,000,000 shares issued and 900,000,000 shares outstanding. What average price did Lowell Co. pay for treasury shares?

A. $10.00

B. $11.11

C. $ 3.57

D. $35.73

E. None of the above

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92308520

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