Question

Ogilvie Corp. issued 12,000 shares of no-par stock for $40 per share. Ogilvie was authorized to issue 35,000 shares. What effect will this event have on the elements of the company's financial statements?

Answer 1

The correct answer is increase assets and equity by $480,000.

Step-by-step explanation:

According to the scenario, the computation of the given data are as follows:

Issued share = 12,000 shares

Value per share = $40 per share

So, we can calculate the effect of this event are as follows:

So, Assets increase = 12,000 × $40 = $480,000

Equity increase = 12,000 × $40 = $480,000

Hence, this event can increase assets and equity by $480,000.