Question

9. Here is a company's December 31" Equity Section of the balance sheet: Common Stock, $10 par, 10,000 shares issued and outstanding $100,000 Paid-In Capital in Excess of Par - Common Stock 240,000 Retained Earnings 700,000 Total Stockholder's Equity $1,040,000 What was the market price paid for each share of common stock? 10. A corporation is authorized by its corporate charter to issue 10,000 shares of preferred stock with a 7% dividend rate and a par value of $3 per share, and 25,000 shares of common stock with a par value of $1 per share. on January 15, 2015, 1,000 shares of preferred stock were issued for $7 per share along with 10,000 shares of common stock for $5.50 per share. How much would each account increase by for the issuance of the stock described above? Common Stock Issuance Cash = Common Stock = Common Stock - Additional Paid in Capital Preferred Stock Issuance Cash = Preferred Stock = Preferred Stock - Additional Paid in Capital =

Answer 1

9.)	Common stock	10,000
	Par value	$10
	Value	1,00,000
	Paid in capital in excess of Par	2,40,000
	Market price paid (240000/10000)	24
10.)	Common stock issuance
	Cash (10000x$5.5)	55000
	Common Stock (10000 x $5.5)	55000
	Common Stock - Additional paid in capital = 10000*5.5 - 10000*4.5 = 10000	10000
	Preferred stock issuance
	Cash (1000 x $7)	7000
	Preferred stock (1000 x $7)	7000
	Preferred Stock - Additional paid in capital = 1000*7 - 1000*4 = 3000	3000