Gopherland Inc. needs to raise capital in order to finance expansion. On January

Question

Gopherland Inc. needs to raise capital in order to finance expansion. On January 1, Year 1, 30,000 shares of $2 par common stock were sold for $9 per share, and 10,000 shares of $20 par, 10% preferred stock were sold at $30 per share.

Which one of the following statements is correct with respect to the effect the issuance of the common stock and preferred stock had on the financial statements of Gopherland Inc. in Year 1?

a. Increased contributed capital.

b. Increased liabilities.

c. Increased cash flows from investing activities

d. Decreased earned capital.

Explanation / Answer

Gopherland Inc. needs to raise capital in order to finance expansion. On January 1, Year 1, 30,000 shares of $2 par common stock were sold for $9 per share, and 10,000 shares of $20 par, 10% preferred stock were sold at $30 per share. Which one of the following statements is correct with respect to the effect the issuance of the common stock and preferred stock had on the financial statements of Gopherland Inc. in Year 1? a. Increased contributed capital.

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