ABC company issued common stock with par value $1 and preferred stock with stated value of...
ABC company issued common stock with par value $1 and preferred
stock with stated value of $10.
On Jan 1: 1,000 shares of common stock for $32 per share.
On Dec 28: 1,000 shares of common stock for $30 per share.
As result of these accounting events, total Equity increased
by:
-
A. $2,000
-
B. $20,000
-
C. $60,000
-
D. $62,000
Homework Answers
Answer : OPTION " D " $62,000
Cash received from investors is 1,000 x $32 + 1,000 x $30 = $62,000. Thus, total equity will increase by $62,000
Workings
After Jan 1 Equity was $32,000: Common stock = 1,000 x $1 = 1,000 Paid-in capital in excess of par, CS=1,000 x ($32-$1) = 31,000.
On Dec.28 more was added to Common Stock 1 x 1,000 = 1,000 and Paid-in Capital, CS 1,000 x (32 - 1) = 31,000.
Thus, as of Dec. 31 Equity had the following composition: Common stock: 2,000 Paid-in capital in excess of par, CS: 60,000 Total Equity = 62,000
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