1. A company issues 1 million shares of common stock with a par value of $0.14 f
ID: 2573679 • Letter: 1
Question
1. A company issues 1 million shares of common stock with a par value of $0.14 for $16.20 a share. The entry to record this transaction includes a debit to Cash for:
D) $140,000, a debit to Capital Receivable for $16,060,000, a credit to Common Stock for $140,000, and a credit to Additional Paid-in Capital for $16,060,000.
2) A company sells 1 million shares of common stock with no par value for $16.00 a share. In recording the transaction, it would debit:
A) Cash and credit Additional Paid-in Capital for $16.00 million.
B) Common Stock and credit Additional Paid-in Capital for $16.00 million.
C) Common Stock and credit Cash for $16.00 million.
D) Cash and credit Common Stock for $16.00 million.
3) Anthem Inc. issues 200,000 shares of stock with a par value of $0.09 for $158 per share. Three years later, it repurchases these shares for $88 per share. Anthem records the repurchase in which of the following ways?
A) Debit Stockholders' Equity for $31.60 million, credit Additional Paid-in Capital for $17.60 million and credit Cash for $17.60 million.
B) Debit Common Stock for $18,000, debit Additional Paid-in Capital for $17,582,000 and credit Cash for $17.60 million.
C) Debit Treasury Stock for $17.60 million and credit Cash for $17.60 million.
D) Debit Common Stock for $18,000, debit Additional Paid-in Capital for $31,582,000 and credit Cash for $31.60 million.
4) GE buys back 307,000 shares of its stock from investors at $52 a share. Two years later it reissues this stock for $72 a share. The stock reissue would be recorded with a debit to Cash for:
A) a debit to Cash of $15.96 million, a debit to Additional Paid-in Capital of $6.14 million, a credit to Treasury Stock of $15.96 million, and a credit to Stockholders' Equity of $6.14 million.
C) a debit to Cash of $22.10 million, a credit to Treasury Stock of $15.96 million, and a credit to Additional Paid-in Capital of $6.14 million.
D) a debit to Cash of $22.10 million, a credit to Treasury Stock of $15.96 million, and a credit to Gain on Sale of Treasury Stock for $6.14 million.
1. A company issues 1 million shares of common stock with a par value of $0.14 for $16.20 a share. The entry to record this transaction includes a debit to Cash for:
Explanation / Answer
Answer Explanation Debit Credit Detailed explanation for journal entry Q-1 C Cash 16200000 Since alternative A & D would incorrectly record cash Common Stock 140000 & Alternatives B would not record additional paid in capital Additional Paid in capital 16060000 Q-2 A Cash 16000000 Since Alternatives B & C would not debit cash & alternative Additional Paid in capital 16000000 D would only credit Common stock which is incorrect Q-3 C Treasury Stock 17600000 No additional Paid in Capital or Common stock is involved Cash 17600000 in buy back of shares. So all other alternatives are incorrect. Q-4 C Cash 22104000 Alternative A is incorrect, since it shows cash incorrectly. Treasury stock 15964000 Alternative B does not show paid in capital Additional Paid in capital 6140000 Alternative C show gain incorrectly.
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