On September 5, Borton Corporation acquired 2,500 shares of its own $1 par common
stock for $22 per share. On October 15, 1,000 shares of the treasury stock is sold for
$25 per share.
Instructions
Journalize the purchase and sale of the treasury stock assuming that the company uses
the cost method.
Answer:
Using the code letters below, indicate how each of the items listed would be handled in
preparing a bank reconciliation. Enter the appropriate code letter in the space to the left
of each item.
Code
A Add to cash balance per books
B Deduct from cash balance per books
C Add to cash balance per bank
D Deduct from cash balance per bank
E Does not affect the bank reconciliation
Items:
1> Outstanding checks.
2> Bank service charge.
3> Check for $420 correctly written and paid by the bank but incorrectly entered in the
cash payments journal for $240.
4> Deposit in transit.
Answer:
A corporation can be organized for the purpose of making a profit or it may be
not-for-profit.
Answer:
The allocation of the cost of an asset to expense over its useful life is called
_________________ for tangible plant assets, ________________ for natural
resources, and _________________ for intangible assets.
Answer:
An operating lease transfers substantially all the benefits and risks of ownership to the
lessee.
Answer:
Using the cash payments journal above, identify each of the posting references
indicated by a letter, as representing:
(1) a posting to a general ledger account.
(2) a posting to a subsidiary ledger account.
(3) that no posting is required.
Answer:
