Please select the correct answer. 5. Two years ago, Terry Wilson purchased a bui

Question

Please select the correct answer.

5. Two years ago, Terry Wilson purchased a building for $210,000. This year, Wilson gave the building, which now has a current market value of $240,000, to Bonkers Corp. in exchange for 5,000 shares of $10-par common stock. Which journal entry by Bonkers correctly records the issuance of this stock? Accounts and Explanations Debit Credit A. Building 240,000 Common Stock 50,000 Paid-In Capital in Excess of Par-Common 190,000 B. Building 210,000 Common Stock 50,000 Paid-In Capital in Excess of Par-Common Common Stock Common Stock 160,000 240,000 210.000 C. Building 240,000 D. Buildin 210,000 6. Dwayne Health Snacks has outstanding issued at $15 per share, and 2,000 shares of S10 par cumulative preferred stock, which was issued at par. Dwayne Health Snack $26,000. How much is Dwayne's total stockholders' equity? 6,000 shares of $3 par common stock, which was s also has a deficit balance in Retained Earnings of A. $66,000 B. $84,000 C. $110,000 D. $136,000 Ink Corporation has 10,000 shares of 5%, $20 par noncumulative preferred stock, and 37,000 shares of common stock outstanding. Ink declared no dividends in 20X18. In 20X9, Ink declares a total dividend of $54,000. How much of the dividends go to the common stockholders? A. $54,000 B. $44,000 C. $34,000 D. None; it all goes to preferred stockholders. 7. 8. Stock splits A. increase the number of shares of stock issued. B. decrease par value per share. C. both A and B. D. neither A nor B.

Explanation / Answer

5. Current market value of the building is irrelavent

Paid in capital in excess of par : 210,000 - (5,000*10) = 160,000

Journal entry

The answer is B.

6. Total stock holders equity = (6,000*15) + (2,000*10) - 26,000

= 84,000

The answer is B.

7. Dividends for common stockholders = 54,000 - (10,000*20*5%)

= 44,000

The answer is B.

8. Stock splits increases the number of shares of issued stock and decrease par value per share.

The answer is C.

Building 210,000 Common stock 50,000 Paid in capital in excess of par- common 160,000

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