Kunze Corporation Has $1 Par Value Common Stock with 100,000

question 150

Multiple Choice

Kunze Corporation has $1 par value Common Stock with 100,000 shares authorized and 25,000 shares issued.The journal entry to record Kunze's purchase of 5,000 shares of common stock at $5 per share would be:

• A)debit Common Stock for $5,000,debit Paid-in Capital in Excess of Par-Common for $20,000 and credit Cash for $25,000.
• B)debit Common Stock for $25,000 and credit Cash for $25,000.
• C)debit Cash for $25,000,credit Common Stock for $5,000 and credit Paid-in Capital in Excess of Par-Common for $20,000.
• D)debit Treasury Stock for $25,000 and credit Cash for $25,000.

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Definitions:

Average Cost

The total cost divided by the quantity produced, measuring how much on average each unit of output costs to produce.

Average Fixed Cost

The total fixed costs of production divided by the quantity of output produced; it decreases as production increases.

Average Variable Cost

The total variable cost divided by the quantity of output produced, indicating the variable cost of producing each unit of output.

Total Variable Cost

The sum of all costs that vary with output level, including costs for raw materials, labor, and utilities that increase or decrease as production volume changes.