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12 July, 11:05

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.

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  1. 12 July, 12:43
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    a. $370,000.

    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
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