[goga79]

On December 1, 2009, Line Corp. received a donation of 2,000 shares of its $5 par value common stock from a stockholder. On that date, the stock’s market value was $35 per share. The stock was originally issued for $25 per share. By what amount would this donation cause total stockholders’ equity to decrease?

A) $70,000

B) $50,000

C) $20,000

D) $0

The correct answer is 0.

Can someone please tell me what the JE would be?

FAR 56

[FAR_WARS]

JE upon donation @ FMV:

t-stock 70,000

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apic 70,000

*t-stock is a contra o/e account, so no reduction of stockholder's equity

*this will decrease the number of shares outstanding, and simultaneously increase book value per share

JE if this stock is later sold:

cash- amt recieved

apic- plug

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t-stock 70,000

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apic- plug

FAR- 80
BEC- 75
AUD- 78
REG- ?

[Author]

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