Frieds Corp

question 77

Multiple Choice

Frieds Corp. was organized on January 1, 2020, with the following authorized share capital: 20,000 common shares, no par value
15,000, $ .10, cumulative preferred shares, no par value
During 2020, the corporation issued 10,000 common shares for $ 700,000 and 10,000 preferred shares at $ 28 per share. On December 20, 2020, subscriptions for 1,000 preferred shares were taken at a purchase price of $ 30. These subscribed shares were paid for on January 2, 2021. What should Frieds report as total contributed capital on its December 31, 2020, balance sheet?

• A) $ 280,000
• B) $ 700,000
• C) $ 980,000
• D) $ 1,130,000

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Definitions:

Straight-Line Method

An accounting method of depreciation where the value of a fixed asset is reduced uniformly over its useful life.

Depreciable Amount

The cost of an asset, or other amount substituted for cost, less its residual value.

Residual Value

The estimated amount that an asset will realize upon its disposal at the end of its useful life after deducting expected costs of disposal.

Annual Depreciation

The portion of the cost of a fixed asset that is expensed each year over its useful life as a way to allocate the cost over time.