Question

# Thompson Co. has 75,000 shares of \$4 par value stock outstanding (total legal capital of \$300,000)....

Thompson Co. has 75,000 shares of \$4 par value stock outstanding (total legal capital of \$300,000). If Thompson splits the stock 2-for-1, what will be the par value of each share after the split?

 A)\$2 B)\$4 C)\$8 D)\$16

Edson Co. purchased 100 shares of treasury stock for \$50 per share. The company later sold the shares for \$55 per share. The entry to record the sale of the shares would include a

a. credit to Paid-in Capital from Treasury Stock for \$500.
 b. credit to Gain on Sale of Treasury Stock for \$500.
c. credit to Treasury Stock for \$5,500.
 d. debit to Cash for \$5,000.

James Co. is a brand new corporation that has not yet issued any stock. The corporation has approved the issuance of 2,500 shares of stock with a \$2 par value to Tom Mills in exchange for land appraised at \$45,000. Upon acquiring the land, James Co.'s land account should be debited for:

 A)\$40,000 B)45,000 C)35,000 D)5,000

Thompson Co. has 75,000 shares of \$4 par value stock outstanding (total legal capital of \$300,000). If Thompson splits the stock 2-for-1, what will be the total legal capital of all Thompson Co. shares after the split?

 A)150,000 B)450,000 C)300,000 D)600,000

 1 Par value of each share after the split = 4/2 = \$2 Option A is correct 2 Debit to Cash = 100*55 = \$5500 Credit to Treasury Stock = 100*50 = \$5000 Credit to Paid-in Capital from Treasury Stock = 100*(55-50) = \$500 credit to Paid-in Capital from Treasury Stock for \$500. Option A is correct 3 The land account should be debited for it's appraised value. Land account should be debited for 45,000 Option B is correct 4 Total legal capital will be same after split. Total legal capital = 300,000 Option C is correct

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