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On December 2, 2024, Chase, Inc. purchased furniture for its new office. In payment for the furniture, Chase, Inc. issued 8,000 shares of common stock with a $5 par value. The furniture has a market value of $44,000. The total increase in stockholders' equity from this transaction would be O $8,000 O $40,000 O $44,000 O $84,000

On December 2, 2024, Chase, Inc. purchased furniture for its new office. In payment for the furniture, Chase, Inc. issued 8,000 shares of common stock with a $5 par value. The furniture has a market value of $44,000. The total increase in stockholders' equity from this transaction would be O $8,000 O $40,000 O $44,000 O $84,000

FINANCIAL ACCOUNTING
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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**Problem Statement:** On December 2, 2024, Chase, Inc. purchased furniture for its new office. In payment for the furniture, Chase, Inc. issued 8,000 shares of common stock with a $5 par value. The furniture has a market value of $44,000. The total increase in stockholders' equity from this transaction would be _______. **Answer Choices:** - ○ $8,000 - ○ $40,000 - ○ $44,000 - ○ $84,000 **Analysis:** When Chase, Inc. issues shares in exchange for the furniture, the common stock is recorded at its par value, and any excess over the par value is recorded as additional paid-in capital. The total stockholders' equity increases by the market value of the issued stock, which matches the market value of the furniture. Thus, the increase in stockholders' equity should be equal to the furniture's market value, which is $44,000. **Correct Answer:** - ○ $44,000
Transcribed Image Text:**Problem Statement:** On December 2, 2024, Chase, Inc. purchased furniture for its new office. In payment for the furniture, Chase, Inc. issued 8,000 shares of common stock with a $5 par value. The furniture has a market value of $44,000. The total increase in stockholders' equity from this transaction would be _______. **Answer Choices:** - ○ $8,000 - ○ $40,000 - ○ $44,000 - ○ $84,000 **Analysis:** When Chase, Inc. issues shares in exchange for the furniture, the common stock is recorded at its par value, and any excess over the par value is recorded as additional paid-in capital. The total stockholders' equity increases by the market value of the issued stock, which matches the market value of the furniture. Thus, the increase in stockholders' equity should be equal to the furniture's market value, which is $44,000. **Correct Answer:** - ○ $44,000
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