Question

Robust Robots recently issued 100,000 shares of common stock at $7 per share. The stock has par value equal to $3 per share. What amount of the $700,000 that RR raised should be reported in the “common stock at par” account, and what amount should be reported in the “paid in capital” account?

Answer 1

Answer:

Common stock at par Paid in capital $300,000 $400,000

Working:

Amount to be reported in the “common stock at par” account = 100000 * $3 = $300,000

Amount to be reported in the paid in capital” account = 100000 * ($7 - $3) = $400,000