Question 1

Valor Company issued 5,000 shares of $1 par common stock for $30 per share,providing the company with $150,000 in cash.What effect,in addition to the increase in cash,does this transaction have on the accounting equation for Valor?

Accepted Answer

A) Common Stock increases $150,000. 
B) Common Stock increases $5,000;Additional Paid-In Capital-Common increases $145,000. 
C) Common Stock increases $5,000;Retained Earnings increases $145,000. 
D) Common Stock increases $5,000;Gain on Sale of Common Stock increases $145,000.

Question 2

Book value is a measure of the market value of the stock.

Accepted Answer

A) True 
 B)False

Question 3

Tony Venato opened Tony's Best Brand Shop as a sole proprietorship by investing $10,000 on January 1,2017.During the first year,the business earned revenues of $520,000 and incurred expenses of $360,000.Tony withdrew $50,000 for personal use.Prepare Tony's statement of owner's equity for the year ended December 31,2017.

Accepted Answer

The answer of Tony Venato opened Tony's Best Brand Shop...

Exam 11: Stockholders Equity

Valor Company issued 5,000 shares of $1 par common stock for $30 per share,providing the company with $150,000 in cash.What effect,in addition to the increase in cash,does this transaction have on the accounting equation for Valor?

Book value is a measure of the market value of the stock.