Chen, Inc. purchases 1,000 shares

? Chen, Inc. purchases 1,000 shares of
its own previously issued $5 per common stock for $12,000. Assuming the shares
are held in the treasury, what effect does this transaction have on (a) net
income, (b) total assets, (c) total paid-in capital, and (d) total
stockholders’ equity?

? The treasury stock purchased in the
above question was resold by Chen, Inc. for $15,000. What effect does this
transaction have on (a) net income, (b) total assets, (c) total paid-in
capital, and (d) total stockholders’ equity?

? What are the different types of
dividends corporations may issue? When should a corporation pay dividends? Do
you prefer a stock dividend or a cash dividend? Why?

? Why do corporations buy back their own
stock? What does it tell you about the corporation? What effect does the
purchase have on the price of a company’s stock?