New Corpissues 2,000 Ordinary Shares with a $10 Par Value at at $14

question 58

Multiple Choice

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

• A)Share Capital-Ordinary $8,000 and Share Premium-Ordinary $20,000.
• B)Share Capital-Ordinary $28,000.
• C)Share Capital-Ordinary $20,000 and Share Premium-Ordinary $8,000.
• D)Share Capital-Ordinary $20,000 and Retained Earnings $8,000.

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Definitions:

Per Unit

A term referring to expressing or measuring amounts for each single item or instance.

Variable Costing

A pricing strategy that incorporates only variable manufacturing expenses such as direct materials, direct labor, and variable factory overhead into the cost of products.

Absorption Costing

A method of cost calculation that takes into account all expenses related to manufacturing, such as direct materials, direct labor, and all overheads, whether fixed or variable, in determining a product's cost.

Production Cost

The total cost of materials, labor, and overheads incurred in the production of goods or services.