If Pratt Company Issues 5,000 Shares of $5 Par Value

question 27

Multiple Choice

If Pratt Company issues 5,000 shares of $5 par value common stock for $210,000, the account

• A)Common Stock will be credited for $185,000.
• B)Paid-in Capital in Excess of Par Value will be credited for $210,000.
• C)Paid-in Capital in Excess of Par Value will be credited for $235,000.
• D)Cash will be debited for $210,000.

---

Definitions:

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account columns to ensure a company's bookkeeping system is mathematically correct.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, leading to net income or loss.

Insurance Expense

The amount a company spends on insurance policies to cover various risks, recorded as an expense in the accounting period in which it is incurred.

Debit

An accounting entry that increases an asset or expense account, or decreases a liability or equity account.