Western Moving Corporation was organized with authoriza-tion to issue 100,000 shares of $1 par value common stock. Forty thousand shares were issued to Tom Morgan, the com-pany’s founder, at a price of $5 per share. No other shares have yet been issued. Which of the following statements is true?a. Morgan owns 40 percent of the stockholders’ equity ofthe corporation.b. The corporation should recognize a $160,000 gain onthe issuance of these shares.c. If the balance sheet includes retained earnings of$50,000, total paid-in capital amounts to $250,000.d. In the balance sheet, the Additional Paid-in Capitalaccount will have a $160,000 balance, regardless of theprofits earned or losses incurred since the corporationwas organized.
Western Moving Corporation was organized with authoriza-
tion to issue 100,000 shares of $1 par value common stock.
Forty thousand shares were issued to Tom Morgan, the com-
pany’s founder, at a price of $5 per share. No other shares have
yet been issued. Which of the following statements is true?
a. Morgan owns 40 percent of the
the corporation.
b. The corporation should recognize a $160,000 gain on
the issuance of these shares.
c. If the balance sheet includes
$50,000, total paid-in capital amounts to $250,000.
d. In the balance sheet, the Additional Paid-in Capital
account will have a $160,000 balance, regardless of the
was organized.
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