Question

On January 1, Year 3, Boxwood, Inc. issues 1,000 shares of $1 par value common stock for $30 per share. Later that year, the company issues 1,000 shares of $10 par value preferred stock for $80 per share. The company’s balance sheet as of December 31, Year 3, will show total paid-in capital of:

Answer 1

total paid-in capital = $110,000

Step-by-step explanation:

When investors or shareholders pay a lump sum money to a company to get the stock of the that company, it is called paid-in capital.

Here, the par value = $1, therefore, additional capital per stock = $30 - $1 = $29

For preferred stock,

Par value = $10, and additional paid-in capital per stock = $(80 - 10) = $70.

See images to get the explanation: