Which of the Following Would Be Included in the Entry

question 132

Multiple Choice

Which of the following would be included in the entry to record the issuance of 5,000 shares of $10 par value common stock at $13 per share cash?

• A) Cash would be debited for $65,000.
• B) Common stock would be debited for $50,000.
• C) Common stock would be credited for $65,000.
• D) Paid-in capital in excess of par-common would be debited for $5,000.

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Definitions:

Equity Value

The value of a company’s shares; it represents the residual value to shareholders after debts and liabilities have been settled.

Sustainable Growth Rate

The maximum rate at which a company can grow its sales, earnings, and dividends without having to increase financial leverage or equity financing.

Return On Equity

A financial ratio that measures the profitability of a business in relation to the amount of equity, indicating how effectively management is using shareholders’ funds.

Payout Ratio

A financial metric showing the proportion of earnings a company pays to its shareholders in the form of dividends.