A Company Issued Rights to Its Existing Shareholders to Purchase

question 81

Multiple Choice

A company issued rights to its existing shareholders to purchase for par unissued shares of common stock with a par value of $10 per share.When the market value of the common stock was $12 per share,the rights were exercised.Common Stock should be credited at $10 per share and

• A) Paid-In Capital from Stock Rights credited at $2 per share.
• B) Additional Paid-In Capital credited at $2 per share.
• C) Retained Earnings credited at $2 per share.
• D) no credit made to Additional Paid-In Capital or Retained Earnings.

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Definitions:

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