Which of the following is incorrect for Smith Company when Smith issues 10,000 shares of $10 par value common stock and pays $20,000 cash in exchange for a building? The market price of the Smith stock on the exchange date was $35 per share and the building's book value on the books of the seller was $200,000.
A) The common stock account increases by $100,000.
B) The building account increases by $370,000.
C)Stockholders' equity increases $350,000.
D)The additional paid-in capital account increases by $100,000.

Question

Quizplus · Accepted Answer

The additional paid-in capital account increases by $250,000, not $100,000. The stock is issued at $35 per share, so the excess over par value is $25 per share ($35 - $10), resulting in $250,000 additional paid-in capital for 10,000 shares.

Which of the Following Is Incorrect for Smith Company When