Garnett Company was organized on January 1, 2020 with authorized capital of 100,000shares of P200 par value. On January 10, the company issued 25,000 shares atP220 per share. On March 25, the company issued 1,000 shares for legal services when the fair value was P240 per share. On September 30, 5,000 shares were issued for a tract of land when the fair value was P260 per share. What amount should be reported for share premium?

a. P540,000

b. P800,000

c. P500,000

d. P840,000

The total amount of cash and other assets received by a corporation from the stockholders in exchange for the shares is __________

a. always equal to par value

b. referred to as paid-in capital

c. referred to as retained earnings

d. always below its stated value

Free Interest - Amounts to be paid to partners are first applied to loan and then on capital

a. True

b. False

Resale of treasury share at more than cost is one source of additional paid-in capital

a. True

b. False

A gain or loss is recognized in profit or loss when the retirement price of share capital differs from the original issue price of the share

a. True

b. False

The corporation reports a stocks par or stated value, the number os shares authorized, issued and outstanding, and if preferred, the dividend rate on the face of the income statement

a. True

b. False

The partner who is least likely to receive priority payment in liquidation is that partner who has the lowest loss absorption capacity

a. True

b. False

When the total shareholders' equity is smaller than the amount of contributed capital, then there is ___

a. a deficit

b. a liability

c. a dividend

d. net loss

When shares with stated value are sold, he proceeds shall be credited to

a. share capital

b. share premium

c. shareholder's equity

d. share capital to the extent of the stated value and any excess is credited to share capital in excess of stated value

Which of the following dividends will result in a decrease to total stockholder's equity? I. Large share dividends II. Cash dividend III. Small Share Dividend

a. III only

b. II only

c. II and III only

d. I, II and III

Partnership liquidation is always preceded by partnership dissolution

a. True

b. False

Reacquisition of share capital does not give rise to gain or loss or recognized in profit or loss

a. True

b. False

Stock can be issued for all except which of the following?

a. property such as delivery truck

b. income tax payments

c. services provided to the corporation such as legal fees

d. accounts payable

Book value per share is total shareholders' equity divided by shares issued minus treasury shares plus subscribed shares

a. True

b. False