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21 July, 16:48

was organized on January 1, 2021. The firm was authorized to issue 170,000 shares of $5 par value common stock. During 2021, Ginger Hardware had the following transactions relating to stockholders' equity: Issued 51,000 shares of common stock at $7 per share. Issued 34,000 shares of common stock at $8 per share. Reported a net income of $170,000. Paid dividends of $85,000. What is total paid-in capital at the end of 2021

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  1. 21 July, 16:58
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    Balance sheet extract as at 31st December, 2021

    Common stock ($255,000+$155,000) $410,000

    Paid in capital in excess of par ($102,000+$93000) $195,000

    Total paid in capital $605,000

    Retained earnings ($170,000-$85,000) $85,000

    Shareholders equity $690,000

    Explanation:

    The issue of 51,000 shares issue would result in cash proceeds of $357,000 with $255,000 recorded in Common stock account and the balance of $102,000 shown in paid-in capital in excess of par.

    The issuance of 34,000 shares would increase cash account by $248,000 while the common stock account and paid-in capital in excess of par would witness increase of $155,000 and $93,000 respectively.

    The net income would be reduced by the amount of dividends declared.
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