Question

Mendes Charters reported the following information at December 31, 2016:

Preferred stock, $100 par, 500 shares authorized, and outstanding; cumulative; nonparticipating; callable at par value $ 50,000
Common stock, $12 par, 50,000 shares authorized and outstanding $600,000
Additional paid-in capital—Common $25,000
Retained earnings $825,000
Mendes' total contributed capital is
a. $650,000
b. $1,500,000
c. $675,000
d. $625,000

Answer 1

The total contributed capital of Mendes Charters is $650,000.

Step-by-step explanation:

The total contributed capital of Mendes Charters can be calculated by adding the preferred stock and the common stock together. The preferred stock has a par value of $100 per share and there are 500 shares outstanding, so the total value of the preferred stock is $100 * 500 = $50,000. The common stock has a par value of $12 per share and there are 50,000 shares outstanding, so the total value of the common stock is $12 * 50,000 = $600,000. Therefore, the total contributed capital is $50,000 + $600,000 = $650,000.