Use the Following Information to Answer the Question Below $\begin{array}{l}\text { Equipment } &160,000\\\text { Common Stock }&&160,000\end{array}$

question 145

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 8,000 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)
• \(\begin{array}{l}
• \text { Equipment } &160,000\\
• \text { Common Stock }&&160,000
• \end{array}\)
• B)
• \(\begin{array}{l}
• \text { Common Stock } &160,000\\
• \text { Equipment }&&160,000
• \end{array}\)
• C)
• \(\begin{array} { l r r }
• \text { Additional Paid-in Capital } & 35,000 & \\
• \text { Equipment } & 125,000 & \\
• \quad \text { Common Stock } & & 160,000
• \end{array}\)
• D)
• \(\begin{array}{l}
• \text { Cash } &160,000\\
• \text { Equipment }&&160,000
• \end{array}\)

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Definitions:

Agreement

A mutual understanding or arrangement, typically formalized by a contract, between two or more parties.

Substantial Performance

In contract law, the situation that results when a party to a contract, in good faith, executes all the promised terms and conditions of the contract with the exception of minor details that do not affect the real intent of their agreement.

Promising

pertains to showing signs of future success or positive outcomes.

Goods

Tangible, movable items or merchandise that can be bought, sold, or traded, excluding real estate.