On February 2, 2016, the Farmer Corporation issued 9,000 shares of no-par stock for $17 per share. Within two hours of the issue, the stock's price jumped on the New York Stock Exchange to $21 per share. Which of the following answers describes the effect of the February 2, 2016 transaction? Assets = Liab. + Com. Stk. Rev. - Exp. = Net Inc Cash A. 153,000 = NA + 153,000 NA - NA = NA 153,000 FA B. 189,000 = NA + 189,000 NA - NA = NA 189,000 IA C. 153,000 = NA + 153,000 NA - NA = NA 153,000 IA D. 189,000 = NA + 189,000 NA - NA = NA 189,000 FA
Option A is the answer Assets and stockholders equity increase by 153,000 (9,000*17) The issue of common stock for cash is a financial activities in flow. Hence option A is the answer |
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On February 2, 2016, the Farmer Corporation issued 9,000 shares of no-par stock for $17 per...
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