New Corp Issues 2,000 Shares of $10 Par Value Common Stock

question 39

Multiple Choice

New Corp. issues 2,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to

• A) Common Stock $20,000 and Paid-in Capital in Excess of Stated Value $8,000.
• B) Common Stock $28,000.
• C) Common Stock $20,000 and Paid-in Capital in Excess of Par Value $8,000.
• D) Common Stock $20,000 and Retained Earnings $8,000.

---

Definitions:

Fair Value Adjustment

A process of adjusting the book value of an asset or liability to reflect its current market value, used in accounting to ensure the fair presentation of financial statements.

Trading Portfolio

A collection of financial assets, such as stocks or bonds, held by an institution or individual for the purpose of realizing profits from short-term price movements.

Unrealized Gain or Loss-Income

The increase or decrease in the value of an investment that has not yet been sold for a profit or loss.

Other Expenses

Costs incurred by a business that do not fit into primary operational categories, such as administrative or selling expenses.