Multiple choice

1. The entry to record the issuance of 1,000 shares of $10 par-value common stock for $14 a share consists of a debit to Cash for $14,000 and a credit to Common Stock for:

A. $14,000. 

B. $10,000 and a credit to Gain on Sale of Common Stock for $4,000. 

C. $14,000 and a credit to Paid-in Capital in Excess of Par Value—Common Stock for $4,000 and a credit of $10,000 to Common Stock. 

D. $10,000 and a credit to Treasury Stock for $4,000. 

2. Which of the following statements is correct?

A. Market value is the figure selected by the organizers of the corporation to be assigned to each share of stock for accounting purposes. 

B. If there is only one class of stock, the stock is called preferred stock. 

C. In the event of liquidation, preferred stockholders have a claim on assets before that of common stockholders. 

D. None of these statements is correct. 

3. The Preferred Stock account is shown in the __________ section of the balance sheet.

A. Assets 

B. Current Liabilities 

C. Long-Term Liabilities 

D. Stockholders' Equity

4. The entry to record the issuance of 1,000 shares of $10 par-value common stock for $14 a share consists of a debit to Cash for $14,000 and a credit to Common Stock for:

A. $14,000. 

B. $10,000 and a credit to Gain on Sale of Common Stock for $4,000. 

C. $14,000 and a credit to Paid-in Capital in Excess of Par Value—Common Stock for $4,000 and a credit of $10,000 to Common Stock. 

D. $10,000 and a credit to Treasury Stock for $4,000.