A Company Sells 1 Million Shares of Stock with No

question 68

Multiple Choice

A company sells 1 million shares of stock with no par value for $15 a share.In recording the transaction,it would:

• A)debit Cash for $20,000 and credit Common Shares for $20,000.
• B)debit Cash for $15 million and credit Common Shares for $15 million.
• C)debit Cash for $15 million,credit Common Shares for $20,000 and credit Contributed surplus for $14,980,000.
• D)debit Cash for $20,000,debit Capital Receivable for $14,980,000,credit Common Shares for $20,000 and credit Contributed surplus for $14,980,000.

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Definitions:

Federal Open Market Committee

The branch of the Federal Reserve System responsible for setting monetary policy, including influencing interest rates and controlling the money supply.

U.S. Government Securities

Financial instruments issued by the United States Department of the Treasury to finance government spending and obligations, considered low-risk investments.

Excess Reserves

The capital reserves held by a bank or financial institution in excess of what is required by regulators, central bank, or other financial authority.

Actual Reserves

The total reserves held by a bank, consisting of both required reserves and any excess reserves not needed to meet central bank requirements.