Question

When Wisconsin Corporation was formed on January 1, the corporate charter provided for 109,300 shares of $12 par value common stock. During its first month of operation, the corporation issued 8,750 shares of stock at a price of $29 per share. The entry to record the above transaction would include a Oa. credit to Paid-In Capital in Excess of Par-Common Stock for $148,750 Ob. credit to Common Stock for $253,750 Oc. debit to Cash for $105,000 Od. debit to Common Stock for $109,300

Answer 1

Answers

• Question #1

--The COMPLETE entry would include:

Debit	Cash received	$253,750	8750 shares x $ 29
Credit	Common Stock	$105,000	8750 shares x $ 12 par value
Credit	Paid in Capital in excess of Par - Common Stock	$148,750	[253750 - 105000]

--Correct answer = Option ‘a’ Credit to Paid in capital for $ 148,750

• Question #2

--Total Equity will decrease by the amount paid for those Treasury Stock.
--Cost of Treasury Stock = 4972 x $ 27 = $ 134,244 = Cash paid to acquire.

--Correct Answer = Option ‘a’ Decrease by $ 134,244

• Question #3

--year end retained earnings balance:

Unadjusted beginning balance	$10,990
Errors adjusted	($3,616)
Adjusted beginning balance	$7,374
Add: Net Income	$16,027
Less: Dividends	$4,374
Ending balance	$19,027

--Correct Answer = Option ‘d’ $ 19,027