Which of the following is incorrect for Smith Company when Smith issues 12,300 s

Q: Which of the following is incorrect for Smith Company when Smith issues 12,300 s

ANSWER = C) ADDITIONAL PAID IN CAPITAL ACCOUNT INCREASES BY $246000 CORRECT ANSWER = 12300 SHARES * ($ 25 - $20) = $ 61500 EXPLANATION STOCKHOLDERS EQUITY INCREASES BY $ 307500 [ $25 * 12300 SHARES] BUILDING ACCOUNT INCREASES BY [(12300 * 25) + 22300 ]= 329800 ADDITIONAL PAID IN CAPITAL ACCOUNT INCREASES BY 12300 SHARES * ($ 25 - $20) = $ 61500 COMMON STOCK ACCOUNT INCREASES BY 12300SHARES * $20 = $246000

ID: 2411094 • Letter: W

Question

Which of the following is incorrect for Smith Company when Smith issues 12,300 shares of $20 par value common stock and pays $22,300 cash in exchange for a building? The market price of the Smith stock on the exchange date was $25 per share and the building’s book value on the books of the seller was $223,000.

Stockholders' equity increases $307,500. The building account increases by $329,800 O The additional paid-in capital account increases by $246,000. The common stock account increases by $246,000.

Explanation / Answer

ANSWER = C) ADDITIONAL PAID IN CAPITAL ACCOUNT INCREASES BY $246000

CORRECT ANSWER = 12300 SHARES * ($ 25 - $20) = $ 61500

EXPLANATION

STOCKHOLDERS EQUITY INCREASES BY $ 307500 [ $25 * 12300 SHARES]

BUILDING ACCOUNT INCREASES BY [(12300 * 25) + 22300 ]= 329800

ADDITIONAL PAID IN CAPITAL ACCOUNT INCREASES BY 12300 SHARES * ($ 25 - $20) = $ 61500

COMMON STOCK ACCOUNT INCREASES BY 12300SHARES * $20 = $246000

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Which of the following is incorrect for Smith Company when Smith issues 12,300 s

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