Question

Clothing Emporium was organized on January 1, 2018. The firm was authorized to issue 100,000 shares of $5 par value common stock. During 2018, Clothing Emporium had the following transactions relating to shareholders' equity: Issued 30,000 shares of common stock at $7 per share. Issued 20,000 shares of common stock at $8 per share. Reported a net income of $100,000. Paid dividends of $50,000. What is total paid-in capital at the end of 2018? a. $370,000. b. $420,000. c. $320,000. d. $470,000.

Answer 1

a. $370,000.

Step-by-step explanation:

The first would be to define additional paid-in that would be the amount paid over face value if the face value is 100 and the share at issued at 105 then there is a 5$ additional paid-in per share.

With that in noticed we are going to check the transaction during 2018:

• 30,000 at $7 ($5 face value $2 additional paid in)

• 20,000 at $8 ($5 face value $3 additional paid in)

Common stock

we got 50,000 issued with their face of $5 = 250,000

additional paid-in capital would be

30,000 shares at $2 = $60,000

and 20,000 shares at $3 = $60,000

additional paid-in $120,000

The total paid-in would be

250,000 common stock

+ 120,000 additional paid-in

Equal to 370,000