Reference no: EM13918217

Question 1
Indicate whether each of the following statements is true or false.
1. lhe corporation Is an entity separate and distinct from Its owners.
2. lhe llablllty of stockholders Is nonnally llmlted to their Investment In the corporation.
3. lhe relative lack of govemment regulation is an advantage of the corporate
fonn of business.
4, There is no joumal entry to record the authorization of capital stock.
S. No-par value stock is quite rare today.

Questlon2
Garcia Corporation recently hired a new accountant with extensive experience in accounting for
partnershlps. Because of the pressure of the new Job, the accountant was unable to review what he had leamed ear11er about corporation accounting. During the first month, he made the followlng entries for the corporation's capltal stock.
May2
10
15
cash
capltal Stock
(Issued 7,810 shares of $11 par value common stock at $13 per
share)
cash
capltal Stock
(Issued 11,590 shares of $18 par value prefened stodc at $55 per
share)
capital Stock
cash
(PUrchased 640 shares of common stock for the treasury at $12 per
share)
101,530
101,530
637,450
637,450
7,680
7,680
On the basis of the explanatlon for each entry, prepare the entries that should have been made for the
capita! stock transactions. (RM:onl entnes In the order displayed In the pn,blem .stat.ement. Credit
aocount tilJes are aummalk:ally indentlild when amount is enc.red. Do notindent manually.)