5) Osbourne Company issued 50,000 shares of common stock in exchange for manufacturing equipment. The equipment was valued at $1,000,000. The stock has par value of $0.01 per share. Osbourne should record a gain on the sale of stock for the difference between the equipment's market value and the stock's current market value.
6) Most preferred stock is sold at a price higher than its par value.
7) If a company's share prices go up from the original issue price, the company will record income for the amount of the gain.
8) No gains or losses are ever recorded by a company when they sell or issue shares of their own stock.
9) Which of the following would be included in the entry to record the issuance of 5,000 shares of $10 par value common stock at $13 per share cash?
A) Cash would be debited for $65,000.
B) Common stock would be debited for $50,000.
C) Common stock would be credited for $65,000.
D) Paid-in capital in excess of par—common would be debited for $5,000.
10) Retained earnings represents:
A) the assets of the corporation less the liabilities.
B) capital contributed by the stockholders of a corporation.
C) the accumulated profits of the corporation less dividends paid out.
D) a liability on the corporate balance sheet.
11) Which of the following occurs when a shareholder invests cash in a corporation in exchange for stock?
A) Both liabilities and stockholders' equity are increased.
B) Both assets and stockholders' equity are increased.
C) One asset is increased and another asset is decreased.
D) Both assets and liabilities are increased.
12) The following information is from the balance sheet of Tudor Corporation as of December 31, 2014.
Preferred stock, $100 par
|
|
$ 500,000
|
Paid-in capital in excess of par—preferred
|
|
35,000
|
Common stock, $1 par
|
|
190,000
|
Paid-in capital in excess of par—common
|
|
380,000
|
Retained earnings
|
|
131,500
|
Total stockholders' equity
|
|
$1,236,500
|
What was the average issue price of the common stock shares?
A) $1.90
B) $1.00
C) $3.00
D) $13.15
13) The following information is from the balance sheet of Tudor Corporation as of December 31, 2014.
Preferred stock, $100 par
|
|
$ 500,000
|
Paid-in capital in excess of par—preferred
|
|
35,000
|
Common stock, $1 par
|
|
190,000
|
Paid-in capital in excess of par—common
|
|
380,000
|
Retained earnings
|
|
131,500
|
Total stockholders' equity
|
|
$1,236,500
|
What is the average issue price of the preferred stock shares?
A) $107
B) $100
C) $176
D) $5,000
14) The following information is from the balance sheet of Tudor Corporation as of December 31, 2014.
Preferred stock, $100 par
|
|
$ 500,000
|
Paid-in capital in excess of par—preferred
|
|
35,000
|
Common stock, $1 par
|
|
190,000
|
Paid-in capital in excess of par—common
|
|
380,000
|
Retained earnings
|
|
131,500
|
Total stockholders' equity
|
|
$1,236,500
|
What was the total paid-in capital as of December 31, 2014?
A) $1,236,600
B) $1,105,000
C) $956,000
D) $131,500