Question 1

In the financial statements, organization costs appears

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...

Question 2

When stock is issued for legal services, the transaction is recorded by debiting Organization Expense for the

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Question 3

New Corp. issues 2,000 shares of $10 par value common stock at $16 per share. When the transaction is recorded, credits are made to

Accepted Answer

The par value of the shares issued is $10, so the total amount of common stock credited should be $20,000 (2,000 shares x $10 par value). The difference between the par value and the issue price is $6 per share ($16 issue price - $10 par value), making the total amount of paid-in capital in excess of par $12,000 (2,000 shares x $6 excess per share). Therefore, the correct entry is Common Stock $20,000 and Paid-in Capital in Excess of Par $12,000.

Question 4

If stock is issued for less than par value, the account

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Question 5

A separate paid-in capital account is used to record each of the following except the issuance of

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Question 6

A corporation has the following account balances: Common stock, $1 par value, $60,000; Paid-in Capital in Excess of Par, $1,300,000. Based on this information, the

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Question 7

Barton Company is a publicly held corporation whose $1 par value stock is actively traded at $31 per share. The company issued 3,000 shares of stock to acquire land recently advertised at $100,000. When recording this transaction, Barton Company will

Accepted Answer

When a company issues stock to acquire an asset, the cost of the asset is recorded at the fair market value of the stock issued. In this case, the land is advertised at $100,000 and the stock is actively traded at $31 per share, so 3,000 shares would be worth $93,000 (3,000 x $31 = $93,000). Therefore, when recording the transaction, Barton Company will debit Land for $93,000 (the fair market value of the land acquired) and credit Common Stock for $3,000 (3,000 shares x $1 par value per share). There is no need to record Paid-In Capital in Excess of Par in this transaction.

Question 8

The following data is available for Blaine Corporation at December 31, 2015:  Based on the data, how many shares of common stock have been issued?

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Question 9

Crain Company issued 2,000 shares of its $5 par value common stock in payment of its attorney's bill of $30,000. The bill was for services performed in helping the company incorporate. Crain should record this transaction by debiting

Accepted Answer

The attorney's bill was for services performed in helping the company incorporate, which is considered an organization expense. Therefore, the transaction should be recorded by debiting Organization Expense for $30,000. The fact that stock was issued instead of cash does not change the nature of the expense.

Question 10

Paid-In Capital in Excess of Stated Value

Accepted Answer

Paid-In Capital in Excess of Stated Value is a component of the paid-in capital section of the balance sheet and represents the excess amount received over the par or stated value of a stock that has a stated value. It has a credit balance and reflects the amount contributed by investors to the company in excess of the minimum legal capital requirements.

Question 11

If Keene Company issues 9,000 shares of $5 par value common stock for $160,000, the account

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Question 12

Carson Packaging Corporation began business in 2015 by issuing 30,000 shares of $3 par common stock for $8 per share and 12,000 shares of 6%, $10 par preferred stock for par. At year end, the common stock had a market value of $12. On its December 31, 2015 balance sheet, Carson Packaging would report

Accepted Answer

The common stock is reported at par value on the balance sheet. With 30,000 shares at a $3 par value, the common stock is reported as $90,000.

Question 13

The following data is available for Blaine Corporation at December 31, 2015:  Based on the data, how many shares of common stock are outstanding?

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Question 14

The authorized stock of a corporation

Accepted Answer

The authorized stock of a corporation is the maximum number of shares that the corporation is permitted to issue, as stated in its charter.

Question 15

If Vickers Company issues 5,000 shares of $5 par value common stock for $175,000,

Accepted Answer

The total amount received for the common stock is $175,000. The par value of 5,000 shares at $5 each is $25,000. Therefore, the remaining $150,000 ($175,000 - $25,000) represents the amount of Paid-In Capital in Excess of Par, which should be credited.

Question 16

If common stock is issued for an amount greater than par value, the excess should be credited to

Accepted Answer

When common stock is issued for an amount greater than par value, the excess should be credited to Paid-in Capital in Excess of Par. This is because the par value is the minimum amount that a company must receive for its stock and any amount received above this minimum is considered additional paid-in capital. This excess amount represents the amount that investors are willing to pay for the stock above its minimum legal requirement.

Question 17

The sale of common stock below par

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Selling common stock below par value is generally not permitted in most states because the par value represents a legal capital threshold that must be maintained to protect creditors.

Question 18

If stock is issued for a noncash asset, the asset should be recorded on the books of the corporation at

Accepted Answer

When stock is issued for a noncash asset, the asset should be recorded at fair value, which is the value at which the asset could be sold in an arm's length transaction between willing parties. This is in accordance with generally accepted accounting principles (GAAP) and ensures that the financial statements reflect the true economic value of the company's assets.

Question 19

Hsu, Inc. issued 10,000 shares of stock at a stated value of $8/share. The total issue of stock sold for $15 per share. The journal entry to record this transaction would include a

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Question 20

Which of the following represents the largest number of common shares?

Accepted Answer

Authorized shares represent the total number of shares a corporation is legally allowed to issue, according to its corporate charter. This number is typically larger than the number of shares actually issued to shareholders (issued shares) and the number of shares currently held by shareholders (outstanding shares). Treasury shares are shares that were issued and later repurchased by the company, reducing the number of outstanding shares but not affecting the number of authorized shares.

Quiz 11: Corporations: Organization, Stock Transactions, Dividends, and Retained Earnings