Answer the following statements true (T) or false (F)
1. When a corporation issues stock at par value, the Cash account is debited and the Common Stock account is credited for an amount equal to the number of shares issued times the par value per share.
2. When a company issues stock at an amount greater than the par value, a gain is recorded for the difference between the issue price and the par value.
3. When a corporation sells 9,000 shares of $12 par value common stock for $159,000, Common Stock is credited for $108,000.
4. Stock issued at amounts in excess of par value results in a gain that is reported on the income statement.
5. Most corporations set par value low and issue common stock at a premium.
1. TRUE
2. FALSE - A premium on the issue of stock is not a gain, income, or profit for the corporation because
the company is dealing with its own stock.
3. TRUE
4. FALSE - A premium on the issue of stock is not a gain, income, or profit for the corporation because the
company is dealing with its own stock.
5. TRUE
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