Answered: 11.) How should the excess of the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Please answer with simple explanation only please. Thank you!

11.) How should the excess of the subscription price over the par value of common stock subscribed be recorded?

as APIC when the subscription is received

as APIC when the subscription is collected

as retained earnings when the subscription is received

as APIC when the capital stock is issued

12.) A Corporation obtains from Prime Products a subscription to 2,000 shares of P10 par common capital stock at a price of P15 a share. The entry to record the event is:

13.) How should a corporation reflect treasury stock on its balance sheet?

as part of its assets

as a deduction in the stockholders’ equity section

as additional paid in capital

as additional shares of capital stock

14.) How is an increase in the number of shares as a result of a stock split recorded?

The transaction may be recorded by a memorandum notation in the general journal.

The transaction may be recorded by a memorandum notation in the common stock account

The transaction may be recorded by a memorandum notation in the general journal and in the common stock account.

There will be a transfer from the retained earnings account to the common stock account, the amount of which is equal to the par value of the new number of shares resulting from the stock split.

15.) Where the recapitalization involves a reduction in the legal capital of the corporation for the purpose of eliminating an existing deficit, or of writing down the inflated book values, the recapitalization is referred to as:

reorganization

quasi-reorganization

incorporation

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