Wheat's Market Just Issued 17,500 New Shares of Common Stock

question 20

Multiple Choice

Wheat's Market just issued 17,500 new shares of 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:

Sunk Costs

Costs that have already been incurred and cannot be recovered, and thus should not influence future business decisions.

Opportunity Costs

Represents the benefits an individual, investor, or business misses out on when choosing one alternative over another.

Accounting System

A systematic process of recording, summarizing, and analyzing financial transactions of a business to provide accurate financial information.

Tactical Decisions

Short-term decisions made within the framework of a company's strategic plans, often involving the allocation of resources or adjustment of operations.