Ogilvie Corporation issued 17,000 shares of no-par stock for $20 per share. Ogilvie was authorized to issue 40,000 shares. What effect will this event have on the company's financial statements?

Question

Quizplus · Accepted Answer

The issuance of 17,000 shares of no-par stock for $20 per share results in an increase in cash (assets) of $340,000 (17,000 x $20). This increase in assets is offset by an increase in stockholders' equity of the same amount. Therefore, the correct answer is that the event will increase assets by $340,000 and increase stockholders' equity by $340,000. Option C is incorrect because this is not an investing activity, but a financing activity. Option A is incorrect because it assumes that all authorized shares have been issued, which may not be the case. Option D is incorrect because an event did occur that will have an impact on the financial statements.

Ogilvie Corporation Issued 17,000 Shares of No-Par Stock for $20