A Corporation Issued 6,000 Shares of Its $2 Par Value

question 138

Multiple Choice

A corporation issued 6,000 shares of its $2 par value common stock in exchange for land that has a market value of $84,000.The entry to record this transaction would include:

• A)A debit to Common Stock for $12,000.
• B)A debit to Land for $12,000.
• C)A credit to Land for $12,000.
• D)A credit to Paid-in Capital in Excess of Par Value,Common Stock for $72,000.
• E)A credit to Common Stock for $84,000.

---

Definitions:

Fixed Costs

Regardless of how much is produced or sold, costs for rent, salaries, and insurance remain unchanged.

Variable Costs

Prices that adjust based on the quantity of products made or sold.

Pretax Income

Income earned by an entity before any taxes have been deducted.

Operating Leverage

The degree to which a firm or project can increase operating income by increasing revenue, reflecting the fixed versus variable cost structure.