Vegan Company Reported the Following: Common Stock, $5 Par, 200,000

question 180

Multiple Choice

Vegan Company reported the following: Common stock, $5 par, 200,000 shares authorized, 50,000 shares issued and outstanding
What is the effect of issuing 2,000 shares of common stock in exchange for land with valued by a realtor at $36,000 if the common stock sells for $12 per share and is regularly traded?

• A) The Land account increases by $24,000.
• B) Retained Earnings decreases by $10,000.
• C) Common Stock increases by $36,000.
• D) Additional Paid-in Capital - Common increases by $24,000.

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Definitions:

Net Average Annual Profit

The average profit of a business over a specified period, after all expenses, taxes, and costs have been deducted.

Material Fact

A fact that could influence the decision of a reasonable person or is likely to affect the outcome of a case, contract, or transaction.

Misrepresentation

A false statement of fact made by one party to another, which induces the latter into entering a contract.

Inducement

An offer or promise made to persuade or influence a person to act in a certain way, often used in contracts and employment agreements.