Question

1) Lerner Company had the following transactions in 2015, its first year of operations. • Issued 20,000 shares of common stock. Stock has par value of $1.00 per share and was issued at $14.00 per share. • Issued 1,000 shares of $100 par value preferred stock. Shares were issued at par. • Earned net income of $35,000, • Paid no dividends. At the end of 2015, what is the total amount of paid-in capital?

Answer 1

Solution:

At the end of 2015, the total amount of paid - in capital is $380,000.

The computation of the total amount of paid - in capital is shown below:

Explanation:

Paid in capital = issue of common stock + issue of preferred stock.

Issue of common stock	=	Number of shares	×	issued price
$280,000	=	20,000 shares	×	$14
Issue of preferred stock	=	Number of shares	×	par value
$100,000	=	1,000 shares		$100

Now,

Paid in capital =$280,000+$100,000

=$380,000