1. A company issued 165 shares of $100 par value common stock for $17,500 cash.

Question

1. A company issued 165 shares of $100 par value common stock for $17,500 cash. The total amount of paid-in capital is:

Multiple Choice

$100.

$1,000.

$1,650.

$17,500.

$16,500.

2.

A corporation issued 6,200 shares of $10 par value common stock in exchange for some land with a market value of $94,000. The entry to record this exchange is:

Multiple Choice

Debit Land $94,000; credit Common Stock $62,000; credit Paid-In Capital in Excess of Par Value, Common Stock $32,000.

Debit Land $94,000; credit Common Stock $94,000.

Debit Land $62,000; credit Common Stock $62,000.

Debit Common Stock $62,000; debit Paid-In Capital in Excess of Par Value, Common Stock $32,000; credit Land $94,000.

Debit Common Stock $94,000; credit Land $94,000.

3.

Fargo Company's outstanding stock consists of 600 shares of noncumulative 5% preferred stock with a $10 par value and 3,200 shares of common stock with a $1 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends.

The amount of dividends paid to preferred and common shareholders in year 1 is:

Multiple Choice

$300 preferred; $21,700 common.

$6,000 preferred; $16,000 common.

$19,0000 preferred; $3,000 common.

$11,000 preferred; $11,000 common.

$22,000 preferred; $0 common.

Dividend Declared year 1 $ 22,000 year 2 $ 5,000 year 3 $ 31,000

Explanation / Answer

1) A company issued share for cash $17500

so total amount of paid in capital is $17500

so answer is d) $17500

2) Journal entry :

so answer is a) Debit Land $94,000; credit Common Stock $62,000; credit Paid-In Capital in Excess of Par Value, Common Stock $32,000.

3) Calculate tota amount of dividend paid to preferred and common shareholder :

Preferred dividend = 600*10*5% = 300

common stock = (22000-300)= 21700

so answer is a) $300 preferred; $21,700 common.

Date accounts & explanation debit credit Land a/c 94000     Common stock a/c 62000     Paid in capital in excess of par value 32000 (To record exchang of common stock with land)

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