Osbourne Inc

question 92

Multiple Choice

Osbourne Inc.issued 50,000 shares of common stock in exchange for manufacturing equipment.The equipment has a fair value of $1,000,000.The stock has par value of $0.01 per share.Which of the following is included in the journal entry to record this transaction?

• A)debit Cash $5,000
• B)credit Gain on Sale of Common Stock $1,050,000
• C)credit Paid-In Capital in Excess of Par-Common $999,500
• D)credit Common Stock-$0.01 Par Value $1,000,000

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Definitions:

Bank Runs

A situation where a large number of a bank's depositors try to withdraw their funds simultaneously over concerns about the bank's solvency.

Reserve Banking

A banking system in which banks hold a fraction of their deposits in reserve, while lending out the remainder to generate profits.

Federal Funds Rate

The interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight, on an uncollateralized basis.

Reserve Requirement

A regulatory mandate on banks to hold a certain percentage of their deposits in reserve either in their vaults or at the central bank.