30. o. Equipment that cost $54,000 and on which $30,000 of accumulated disposed

Question

30. o. Equipment that cost $54,000 and on which $30,000 of accumulated disposed of for $27,000 cash. The entry to record this event would include a A) gain of $3,000 B) C) loss of $3,000. credit to the Equipment account for $9,000. credit to Accumulated Depreciation for $30,000. D) 31. If Lantz Company issues 5,000 shares of S5 par value common stock for $210,000 the account Common Stock will be credited for $25,000. Paid-in Capital in Excess of Par Value will be credited for $25,000. Paid-in Capital in Excess of Par Value will be credited for $210,000. Cash will be debited for $185,000. A) B) C) D) If common stock is issued for an amount greater than par value, t A) Cash. B) Retained Earnings. C) D) Legal Capital. 32. the excess should be credited to Additional Paid-in Capital 33. A corporat ion purchases 15,000 shares of its own $20 par common stock for $35 per share, recording i at cost. What will be the effect on total stockholders' equity? A) Increase by $525,000. B) Decrease by $300,000. C) Decrease by $525,000. D) Decrease by $225,000. A) provide information about the investing and financing activities during a period. R) nmve that revenues exceed expenses if there is a net income. 34. The primary purpose of the statement of cash flows is to tha cash receipts and cash payments during a period.

Explanation / Answer

Part 1 - (a) Gain of $3000

Part 2 - (a) Common stock credited for $25000

Journal for issue of common stock

Part 3 - (c) Additional paid in capital

As seen in Part 2, Additional paid in capital is credited for $185000 (Excess amount over par value of $25000).

Hence Excess amount over par value is treated like Premium and hence credited to the 'Additional Paid in Capital.'

Part 4 - (c) Shareholders equity decrease by $525000

Journal on Purchase of own Shares

Treasury stock will be 'Deducted' from Stockholders equity.

Particulars Amount Cost of equipment $54000 Less : Accumulated Depreciation $30000 Net Book value $24000 Sale value of asset $27000 Gain on sale of asset $3000

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