Ralston Company is authorized to issue 10,000 shares of 8%, $100 par value preferred stock and 500,000 shares of no-par common stock with a stated value of $1 per share.If Ralston issues 9,000 shares of common stock to pay its recent attorney's bill of $37,500 for legal services rendered in the organization of the corporation, which of the following would 1.

Question

Quizplus · Accepted Answer

Issuing common stock to pay for legal services in the organization of the corporation is an appropriate use of common stock. However, issuing common stock to pay for preferred dividends or to cover a budget deficit would not be appropriate. The issuance of preferred stock is also not relevant in this scenario.

Ralston Company Is Authorized to Issue 10,000 Shares of 8