24 A company issues 20,000 shares of S5 par common stock at $6.00 per share. The

Question

24 A company issues 20,000 shares of S5 par common stock at $6.00 per share. The entry to record the issuance of these shares would be: (a) Cash 120,000 Common Stock 120,000 100,000 20,000 100,000 (b) Cash Common Stock Contributed Capital in Excess of Par Value (c) Cash 120,000 Common Stock Gain on Sale of Stock 20,000 (d) Cash 120,000 100,000 Common Stock Retained Earnings 20,000 Which of the following would never be a contra equity account? (a) (b) (c) (d) 25. Treasury Stock. Unrealized Loss on Available For Sale Securities. Subscriptions Receivable. Paid In Capital From Treasury Stock.

Explanation / Answer

24.

Correct answer is option b.

Reason being when common stocks are issued at a price higher than face value,the excess amount shall be credited to an account called 'Contributed Capital inexess of par value'.

25.

Correct answer is option b.

ie,Unrealized loss on Available for sale securities.

Since Unrealized loss on Available for sale securities does not result an decrease in Equity,it would never be a contra equity account.

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