Use the Following Information to Answer the Question Below $\begin{array}{l}\text { Equipment } &140,000\\\text { Common Stock }&&140,000\end{array}$

question 107

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 3 would be:

• A)
• \(\begin{array}{l}
• \text { Equipment } &140,000\\
• \text { Common Stock }&&140,000
• \end{array} \)
• B)
• \(\begin{array}{c}
• \text { Common Stock } &140,000\\
• \text { Equipment }&&140,000
• \end{array}\)
• C)
• \(\begin{array}{l}
• \text { Equipment } &160,000\\
• \text { Common Stock }&&160,000
• \end{array}\)
• D)
• \(\begin{array} { lr c }
• \text { Equipment } & 160,000 & \\
• \text { Common Stock } && 140,000 \\
• \text { Additional Paid-in Capital } && 20,000
• \end{array}\)

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Definitions:

Metric System

A system of measurements that uses the base function of 10.

Base Ten

A numeral system that is decimal and uses ten as its base for counting and calculations.

Teaspoon

A small spoon used typically for measuring or stirring liquids, equivalent to about 5 milliliters in volume.