Wheat's Market Just Issued $350,000 of New Common Stock at a Price

question 60

Multiple Choice

Wheat's Market just issued $350,000 of new common stock at a price of $20 a share. How will this transaction affect the equity accounts on the firm's balance sheet if the par value is $1 per share?

• A) The common stock account will increase by $350,000.
• B) The common stock account will decrease by $17,500.
• C) Paid in surplus will increase by $332,500.
• D)Paid in surplus will increase by $350,000.

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Definitions:

Depreciation Expense

The cost allocated over the useful life of a tangible asset to account for its decline in value due to use and time.

Accumulated Depreciation

The total depreciation for a fixed asset that has been charged to expense since the asset was acquired and available for use.

Adjusting Entry

A journal entry made at the end of an accounting period to update account balances to reflect accurate and fair financial statements.

Closing Entry

An accounting entry made at the end of an accounting period to transfer balances from temporary accounts to permanent accounts.