Response to the following questions:
1. a. In what respect does treasury stock differ from unissued stock?
b. How should treasury stock be presented on the balance sheet?
2. A corporation reacquires 5,000 shares of its own $40 par common stock for $370,000, recording it at cost.
(a) What effect does this transaction have on revenue or expense of the period?
(b) What effect does it have on stockholders' equity?
3. The treasury stock in Question 14 is resold for $400,000.
(a) What is the effect on the corporation's revenue of the period?
(b) What is the effect on stockholders' equity?
4. What is the primary purpose of a stock split?