Tim Howard Gloves Issued 4

question 160

Multiple Choice

Tim Howard Gloves issued 4.75% bonds with a face amount of $24 million, together with 4 million shares of its $1 par common stock, for a combined cash amount of $44 million. The fair value of Howard's stock cannot be determined. The bonds would have sold for $18 million if issued separately. For this transaction, Howard should record paid-in capital-excess of par in the amount of:

• A) $26 million
• B) $22 million
• C) $18 million
• D) $16 million

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Definitions:

Short-Term Loans

Short-term loans are financial obligations due for repayment within a year, often utilized for immediate cash flow needs.

Fixed Assets

Tangible or intangible items owned by a business that are used over a long period of time for the operation of the business, such as buildings, machinery, or equipment.

Working Capital

The disparity between an organization's immediate assets and liabilities, revealing its short-term fiscal stability and operational effectiveness.

Short-Term Liabilities

Financial obligations of a business that are due to be paid within one year.