A Corporation Was Formed on January 1

question 189

Multiple Choice

A corporation was formed on January 1.The corporate charter authorized 100,000 shares of $10 par value common stock.During the first month of operation,the corporation issued 300 shares to its attorneys in payment of a $5,000 charge for drawing up the articles of incorporation.The entry to record this transaction would include:

• A)A debit to Organization Expenses for $3,000.
• B)A debit to Organization Expenses for $5,000.
• C)A credit to Common Stock for $5,000.
• D)A credit to Contributed Capital in Excess of Par Value,Common Stock,for $5,000.
• E)A debit to Contributed Capital in Excess of Par Value,Common Stock,for $2,000.

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Definitions:

Materials

Refers to the raw inputs or supplies used in the manufacturing or production of goods.

Generally Accepted Accounting Principles

A set of rules and standards used by accountants to prepare, present, and report financial statements for companies and organizations.

Factory Overhead Rate

The method of allocating indirect costs to produced goods, usually calculated by dividing total factory overhead costs by a base such as direct labor hours or machine hours.

Product Costing

The method used to determine the expenses associated with producing a product, considering factors like raw materials, labor, and overhead costs.