Baden Corporation Is a Publicly Held Corporation Whose Shares, Issued

question 159

Multiple Choice

Baden Corporation is a publicly held corporation whose shares, issued at $1 per share are actively traded at $20 per share. The company issued 1,000 shares to acquire land recently appraised at $15,000. When recording this transaction, Baden will

• A) debit Land for $15,000.
• B) credit Common Shares for $20,000.
• C) debit Land for $20,000.
• D) credit Gain on Purchase of Land for $5,000.

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Definitions:

Face Value

The nominal or dollar value stated on a financial instrument, such as a bond or stock certificate.

Bond Issue

The process of offering bonds for sale to investors as a way of borrowing money for long-term capital needs.

Interest Payable

The amount of interest expense that has been incurred but not yet paid by the company.

Callable Bonds

Bonds that can be redeemed by the issuer before their maturity date at a specified price.