A Company Issues 1 Million Shares of Common Stock with a Par

question 138

Multiple Choice

A company issues 1 million shares of common stock with a par value of $0.02 for $15 a share.The entry to record this transaction includes a debit to Cash for:

• A)$20,000 and a credit to Common Stock for $20,000.
• B)$15,000,000 and a credit to Common Stock for $15,000,000.
• C)$15,000,000,a credit to Common Stock for $20,000,and a credit to Additional Paid-in Capital for $14,980,000.
• D)$20,000,a debit to Capital Receivable for $14,980,000,a credit to Common Stock for $20,000,and a credit to Additional Paid-in Capital for $14,980,000.

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Definitions:

Investment Income

Income earned from the ownership of investments like stocks, bonds, mutual funds, and other financial assets.

U.S. Tax Liability

The total amount of tax owed to the U.S. government, including federal, state, and local taxes, by an individual, corporation, or other entity in a given tax year.

Foreign Income Taxes

Taxes paid to a foreign government for income earned from sources within that foreign country, which may be subject to tax credit or deduction in the taxpayer's home country.

Education Credit Deduction

A tax benefit that reduces the amount of income tax owed by students or their families based on qualified education expenses, intended to decrease the cost of further education.