Question

A corporation issues 5,000 shares of its $6 par value, 10%, cumulative preferred stock on November 20 for $45 per share. What is the increase to Paid-In Capital in Excess of Par on the issue date?

Answer 1

The increase to Paid-In Capital in Excess of Par when a corporation issues 5,000 shares at $45 per share with a $6 par value is $195,000.

Step-by-step explanation:

The increase to Paid-In Capital in Excess of Par when a corporation issues shares is calculated by subtracting the par value of the shares from the issue price, and then multiplying by the number of shares issued.

In this case, the corporation issues 5,000 shares of its $6 par value, 10%, cumulative preferred stock at $45 per share. Thus, the increase to Paid-In Capital in Excess of Par would be (Issue Price - Par Value) × Number of Shares = ($45 - $6) × 5,000 = $195,000.