Question

South Beach Apparel issued 11,000 shares of $4 par value stock for $20 per share. What is true about the journal entry to record the issuance?

Multiple Choice

• Credit Common Stock $220,000

• Debit Common Stock $44,000

• Credit Additional Paid-In Capital $176,000

• Credit Cash $220,000   

  A company issued 1,900 shares of $3 par value preferred stock for $4 per share. What is true about the journal entry to record the issuance?

  Multiple Choice

• Credit Additional Paid-In Capital $1,900

• Debit Preferred Stock $7,600

• Credit Cash $7,600

• Credit Preferred Stock $7,600

  On February 22, Brett Corporation acquired 200 shares of its $4 par value common stock for $23 each. On March 15, the company resold 64 shares for $27 each. What is true of the entry for reselling the shares?

  Multiple Choice

• Credit Treasury Stock $1,728

• Credit Cash $1,472

• Credit Additional Paid–in Capital $256

• Debit Treasury Stock $1,472

Answer 1

• Answer #1

Entry to record issuance:

Accounts title	Debit	Credit
Cash [11000 shares x $ 20]	$220,000
Common Stock [11000 shares x $ 4 par]		$44,000
Additional paid in capital [11000 shares x $ 16]		$176,000

Correct Answer = Option #3: Credit Additional paid in capital $ 176000

• Answer #2

Accounts title	Debit	Credit
Cash [1900 shares x $ 4]	$7,600
Preferred Stock [1900 shares x $ 3 par]		$5,700
Additional paid in capital [1900 shares x $ 1]		$1,900

Correct Answer = Option #1: Credit Additional Paid in Capital $ 1900

• Answer #3

Accounts title	Debit	Credit
Cash [64 shares x $ 27]	$1,728
Treasury Stock [64 shares x $ 23 cost]		$1,472
Additional paid in capital [64 shares x $ 4]		$256

Correct Answer = Option #3: Credit Additional Paid in Capital $ 256