S & C Company Issues 2,400 Shares of Common Stock

question 66

Multiple Choice

S & C Company issues 2,400 shares of common stock with a $6 par value. The issue price of the stock is $14 per share, and the company paid an underwriter $800 in stock issue costs. What is the journal entry required to record the issuance of the shares?

• A) \[\begin{array} { | l | l | l | }
• \hline \text { Cash } & 33,600 & \\
• \hline \text { Common Stock - } \$ 6 \text { par } & & 14,400 \\
• \hline \text { Addl. Paid-in Capital in Excess of Par-Common } & & 19,200 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | l | l | }
• \hline \text { Cash } & 33,600 & \\
• \hline \text { Common Stock } - \$ 6 \text { par } & & 13,600 \\
• \hline \text { Addl. Paid-in Capital in Excess of Par-Common } & & 20,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | r | l | }
• \hline \text { Cash } & 32,800 & \\
• \hline \text { Common Stock } - \$ 6 \text { par } & & 14,400 \\
• \hline \text { Addl. Paid-in Capital in Excess of Par-Common } & & 18,400 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | l | l | }
• \hline \text { Cash } & 32,000 & \\
• \hline \text { Common Stock } - \$ 6 \text { par } & & 13,600 \\
• \hline \text { Addl. Paid-in Capital in Excess of Par-Common } & & 18,400 \\
• \hline
• \end{array}\]

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Definitions:

Price Ceiling

A government-imposed limit on how high a price is charged for a product, aimed at preventing prices from reaching levels deemed too high.

Price Floor

A government or group-imposed price control or limit on how low a price can be charged for a product. It is aimed at preventing prices from being too low.

Shortage

refers to a situation where the demand for a product or service exceeds the supply available at a specific price.

Surplus

The condition where quantity supplied exceeds quantity demanded, often leading to a decrease in prices.