96. If shares are issued for a non-cash asset, the asset should be recorded on the books of the corporation at
a.fair value.
b.cost.
c.zero.
d.a nominal amount.
97. If shares are issued for less than par value, the account
a.Share Premium–Ordinary is credited.
b.Share Premium–Ordinary is debited if a debit balance exists in the account.
c.Share Premium–Ordinary is debited if a credit balance exists in the account.
d.Retained Earnings is credited.
98. The sale of ordinary shares below par
a.is a common occurrence in most jurisdictions.
b.is not permitted in most jurisdictions.
c.is a practice that most shareholders encourage.
d.requires that a liability be recorded for the difference between the sales price and the par value of the shares.
99. Share Premium–Ordinary
a.is credited when no-par share does not have a stated value.
b.is reported as part of equity on the statement of financial position.
c.represents the amount of legal capital.
d.normally has a debit balance.
100.Dailey Company is a publicly held corporation whose $1 par value ordinary shares are actively traded at $22 per share. The company issued 3,000 shares to acquire land recently advertised at $82,000. When recording this transaction, Dailey Company will
a.debit Land for $82,000.
b.credit Share Capital–Ordinary for $66,000.
c.debit Land for $66,000.
d.credit Share Premium–Ordinary for $79,000.
101.Simon Company issued 2,000 ordinary shares with a $5 par value in payment of its attorney's bill of $40,000. The bill was for services performed in helping the company incorporate. Simon should record this transaction by debiting
a.Legal Expense for $10,000.
b.Legal Expense for $40,000.
c.Organization Expense for $10,000.
d.Organization Expense for $40,000.
102.In the financial statements, organization costs appears
a.immediately below Retained Earnings in the equity section.
b.in the income statement.
c.as part of share premium in the equity section.
d.as an intangible asset.
103.New Corp. issues 2,000 ordinary shares with a $10 par value at $16 per share. When the transaction is recorded, credits are made to
a.Share Capital–Ordinary $12,000 and Share Premium–Ordinary $20,000.
b.Share Capital–Ordinary $32,000.
c.Share Capital–Ordinary $20,000 and Share Premium–Ordinary $12,000.
d.Share Capital–Ordinary $20,000 and Retained Earnings $12,000.
104.If Kiner Company issues 4,500 ordinary shares with a $5 par value for $80,000, the account
a.Share Capital–Ordinary will be credited for $22,500.
b.Share Premium–Ordinary will be credited for $22,500.
c.Share Premium–Ordinary will be credited for $80,000.
d.Cash will be debited for $57,500.
105.Kerwin Packaging Corporation began business in 2013 by issuing 40,000 ordinary shares with a $5 par for $8 per share and 10,000 preference shares of 6%, $10 par at par. At year end, the common share had a market value of $10. On its December 31, 2014, statement of financial position, Kerwin Packaging would report
a.Share Capital–Ordinary of $400,000.
b.Share Capital–Ordinary of $200,000.
c.Share Capital–Ordinary of $320,000.
d.Share Premium–Ordinary of $200,000.