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:

Bonds Payable

Long-term liabilities representing money a company owes to bondholders, to be repaid at a future date.

Discount on Bonds Payable

The variance between the face value of a bond and the amount it is sold for when the sale price is beneath its face value.

Date of Issue

The date on which a financial instrument, such as a bond or stock, is made available for sale or issued.

Redemption

The process of paying off or buying back securities or debts by the issuer before their maturity date, often at a predetermined price.