Vegan Company Reported the Following: Common Stock, $5 Par, 200,000

question 180

Multiple Choice

Vegan Company reported the following: Common stock, $5 par, 200,000 shares authorized, 50,000 shares issued and outstanding
What is the effect of issuing 2,000 shares of common stock in exchange for land with valued by a realtor at $36,000 if the common stock sells for $12 per share and is regularly traded?

• A) The Land account increases by $24,000.
• B) Retained Earnings decreases by $10,000.
• C) Common Stock increases by $36,000.
• D) Additional Paid-in Capital - Common increases by $24,000.

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Definitions:

Cash Dividend

Funds distributed to a category of shareholders from a corporation's earnings, a decision made by the board of directors, usually provided in cash.

Voting Shares

Shares that give the shareholder the right to vote on matters of corporate policy and the composition of the members of the board of directors.

Investement Account

An account held at a financial institution that contains securities, cash, and other assets that an individual or entity is investing in.

Debt Investments

Investments in bonds or other debt instruments where the investor lends money to an entity in exchange for interest payments and the return of principal at maturity.