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How would the company record the transaction

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Reference no: EM132826453

Problem 1: A company purchased machinery by issuing 2,000 shares of $3 par value common stock. Since the company is new, there is no established market price for its stock. How would the company record the transaction?

a. At the cost recorded by the previous owner of the machine
b. In terms of the par value of the stock issued
c. Recording the transaction would be postponed until a market price for the stock could be determined.
d. At the fair market value of the machine

Problem 2: Which of the following transactions has an effect on the statement of cash flows?

a. A large stock dividend
b. The sale of preferred stock
c. A small stock dividend
d. The declaration of a cash dividend

Reference no: EM132826453

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