Question

Base Line Incorporated is authorized to issue 50,000 shares of $15 par value common stock. On January 1, Year 1, Base Line issued 10,000 shares of the stock for $24 per share. Immediately after the issue, Base Line's balance sheet will show ______ of paid-in-capital in excess of par value.

Answer 1

When Base Line Incorporated issued 10,000 shares of $15 par value common stock for $24 per share, it received $240,000 from the investors. The balance sheet will show $90,000 of paid-in capital in excess of par value.

Step-by-step explanation:

When Base Line Incorporated issued 10,000 shares of $15 par value common stock for $24 per share, it received $240,000 from the investors. The par value of the shares is $15, so the total par value of the issued shares is 10,000 * $15 = $150,000. The difference between the amount received from investors ($240,000) and the par value of the shares issued ($150,000) is the amount of paid-in capital in excess of par value.

Therefore, immediately after the issue, Base Line's balance sheet will show $240,000 - $150,000 = $90,000 of paid-in capital in excess of par value.

Answer 2

After issuing 10,000 shares at $24 per share with a par value of $15, Base Line Incorporated's balance sheet will show $90,000 of 'Paid-in-Capital in Excess of Par Value'.

Step-by-step explanation:

Base Line Incorporated is authorized to issue a certain number of shares. When a company issues shares above their par value, the excess amount is recorded as 'Paid-in-Capital in Excess of Par Value' on the balance sheet. The calculation is straightforward:

Excess = (Issue Price - Par Value) × Number of Shares Issued

For Base Line Incorporated, each share was sold for $24 (which is the issue price) when the par value is $15:

Excess = ($24 - $15) × 10,000

Excess = $9 × 10,000

Excess = $90,000

Therefore, immediately after the issue, Base Line's balance sheet will show $90,000 of 'Paid-in-Capital in Excess of Par Value'.