Use the Following Information to Answer the Question Below $\begin{array}{llr} \text { Cash } &200,000\\ \text { Common Stock } &&200,000\\\end{array}$

question 131

Multiple Choice

Use the following information to answer the question below. When Calvert Corporation was formed on January 1,2010,the corporate charter provided for 50,000 shares of $20 par value common stock.The following transactions were among those engaged in by the corporation during its first month of operation:
1) The corporation issued 200 shares of stock to its lawyer in full payment of the $5,000 bill for assisting the company in drawing up its articles of incorporation and filing the proper papers with the state agency.
2) The company issued 8,000 shares of stock at a price of $25 per share.
3) The company issued 7,000 shares of stock in exchange for equipment that had a fair market value of $160,000.
The entry to record transaction 2 would be:

• A)
• \(\begin{array}{llr}
• \text { Cash } &200,000\\
• \text { Common Stock } &&200,000\\
• \end{array}\)
• B)
• \(\begin{array}{l}
• \text { Cash }&200,000\\
• \text { Common Stock } && 160,000 \\
• \text { Additional Paid-in Capital } && 40,000
• \end{array}\)
• C)
• \(\begin{array}{l}
• \text { Cash } & 160,000\\
• \text { Additional Paid-in Capital }&&40,000\\
• \text { Common Stock }&&200,000
• \end{array}\)
• D)
• \(\begin{array}{ll}
• \text { Cash } & 160,000 \\
• \text { Common Stock } &&160,000
• \end{array}\)

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Definitions:

Self-fulfilling Prophecy

When persons behave toward another person according to a label (impression) and cause the person to respond in ways that confirm the label.

Stereotype Threat

The suspicion a member of a group holds that he or she will be judged based on a common stereotype of the group.

Confirmation Bias

The tendency to focus on information relevant to a belief and ignoring or downplaying information that is inconsistent with that belief.

Anchoring and Adjustment

A cognitive bias where individuals rely too heavily on an initial piece of information (the "anchor") when making decisions, with adjustments made too conservatively.