Asked by Francesca Kivitt on Apr 28, 2024
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Alpha Company issued 1,000 shares of $10 par value common stock to stockholders,in exchange for $15,000 cash.Which of the following correctly describes the impact of this transaction on Alpha's financial statements?
A) A $15,000 investment is reported as a long-term investment.
B) Stockholders have invested $25,000 as stockholders' equity.
C) Common stock is reported at $15,000 in stockholders' equity.
D) Additional paid-in capital of $5,000 is reported in stockholders' equity.
Par Value
The nominal or stated value of a stock or bond, set by the issuing company and not necessarily indicative of the market value.
Paid-In Capital
Funds raised by a company through the issue of securities to investors, representing the capital provided by shareholders in exchange for shares of stock.
Common Stock
A type of security that represents ownership in a corporation, giving holders voting rights and a share in the company's profits via dividends.
- Examine the effects of issuing stocks and making investments on the equity and assets of shareholders.
- Comprehend the treatment of stockholders' equity in different transactions.
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Learning Objectives
- Examine the effects of issuing stocks and making investments on the equity and assets of shareholders.
- Comprehend the treatment of stockholders' equity in different transactions.
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