Suppose 100 Common Shares Are Issued for $12

question 95

Multiple Choice

Suppose 100 common shares are issued for $12.50 per share.The entry to record this issuance includes a:

• A) credit to Retained Earnings for $1,250
• B) credit to Common shares for $1,250
• C) credit to Contributed Surplus for $250
• D) debit to Preferred Shares for $1,000

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Definitions:

Variable Costs

Outlays that fluctuate according to the amount of production or volume of sales.

Flexible Budget Performance Report

A report comparing actual operating results to a budget that adjusts with changes in the volume of activity.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue is contributing to fixed costs and profit.

Fixed Budget

A budget that remains constant, regardless of changes in the volume of activity, sales, or other factors.