The March 25 transaction increases APIC by 4000 1000 x 24 20 because the

The march 25 transaction increases apic by 4000 1000

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The March 25 transaction increases APIC by $4,000 [1,000 x ($24 – $20)] because the transaction is valued at the FMV of the services or the FMV of the stock, whichever is more clearly determinable. Similarly, the September 30 transaction increases APIC by $30,000 [5,000 x ($26 – $20)]. Therefore, Ashe should report APIC of $84,000 ($50,000 + $4,000 + $30,000) at 12/31/07. This answer is incorrect. Refer to the correct answer explanation. This answer is incorrect. Refer to the correct answer explanation. This answer is incorrect. Refer to the correct answer explanation. Question: STK-0009 During 2006 Bradley Corporation issued for $110 per share, 5,000 shares of $100 par value convertible preferred stock. One share of preferred stock can be converted into three shares of Bradley’s $25 par value common stock at the option of the preferred shareholder. On December 31, 2007, all of the preferred stock was converted into common stock. The market value of the common stock at the conversion date was $40 per share. What amount should be credited to the common stock account on December 31, 2007? Answers A : $375,000 B : $500,000 C : $550,000 D : $600,000 Answer Explanations A. Answer A is correct. All 5,000 shares of the convertible preferred stock were converted to common stock at the rate of 3 to 1 (making 15,000 common shares issued). The common stock account is credited for the par value of these shares: 15,000 x $25 or $375,000. Although not necessary, the journal entry to record the conversion can be prepared Preferred stock 500,000 (5,000 x $100) Paid-in capital--PS 50,000 (5,000 x $10) Common stock 375,000 (15,000 x $25) Paid-in capital-- CS 175,000 (plug)
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The $40 market value of the common stock is ignored. Gains (losses) are not recognized on the conversion of preferred stock. The book value method is used and the paid-in capital, common stock account is credited for the amount necessary to balance the entry. This answer is incorrect. Refer to the correct answer explanation. This answer is incorrect. Refer to the correct answer explanation. This answer is incorrect. Refer to the correct answer explanation. Question: STK-0010 In 2006, Orlando, Inc. issued for $105 per share, 8,000 shares of $100 par value convertible preferred stock. One share of preferred stock can be converted into three shares of Orlando’s $25 par value common stock at the option of the preferred shareholder. In August 2007 all of the preferred stock was converted into common stock. The market value of the common stock at the date of the conversion was $30 per share. What total amount should be credited to additional paid-in capital (APIC) as a result of the issuance of the preferred stock and its subsequent conversion into common stock? Answers A : $ 80,000 B : $120,000 C : $200,000 D : $240,000 Answer Explanations This answer is incorrect. Refer to the correct answer explanation. This answer is incorrect. Refer to the correct answer explanation. This answer is incorrect. Refer to the correct answer explanation.
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