A Corporation Issued 6,000 Shares of Its $2 Par Value

question 220

Multiple Choice

A corporation issued 6,000 shares of its $2 par value common stock in exchange for land that has a market value of $84,000. The entry to record this transaction would include:

• A) A credit to Paid-in Capital in Excess of Par Value, Common Stock for $72,000.
• B) A credit to Common Stock for $84,000.
• C) A debit to Common Stock for $12,000.
• D) A debit to Land for $12,000.
• E) A credit to Land for $12,000.

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Definitions:

Direct Materials Cost

The cost of raw materials that can be directly attributed to the production of goods.

Factory Machinery

Heavy equipment and tools used in a manufacturing or production environment to produce goods.

Factory Overhead Cost

Expenses related to the operation of a manufacturing facility that are not directly tied to a specific product, including utilities, depreciation, and maintenance.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting the decrease in value over time.