Zigma Corporation is authorized to issue 2,000,000 $4 par value shares. The corporation issued half the shares for cash at $8 per share, earned $336,000 during the first three months of operation, and declared a cash dividend of $60,000. The issued and fully paid capital of Zigma Corporation after three months of operation is:

Question

Quizplus · Accepted Answer

- The authorized capital of the corporation is irrelevant to calculating the issued and fully paid capital.
- The corporation issued half of the authorized shares, i.e 1,000,000 shares, for cash at $8 per share, which means the total proceeds from issuing shares is 1,000,000 x $8 = $8,000,000.
- The earned profit during the first three months of operations is not relevant to the calculation of issued and fully paid capital.
- The declared dividend of $60,000 is not relevant to the calculation of issued and fully paid capital.
- The issued and fully paid capital is simply the total amount the corporation received from issuing shares, which is $8,000,000.

Zigma Corporation Is Authorized to Issue 2,000,000 $4 Par Value