If 100 shares of $50 par value stock were issued at $75 per share,how much would constitute capital surplus?
A) $750
B) $7,500
C) $2,500
D) $5,000

Question

Quizplus · Accepted Answer

The capital surplus is the amount of money that is received above the par value of the stock when it is issued. In this case, the par value of the stock is $50 per share and 100 shares were issued, which means the total par value is $5,000 (50 x 100). However, the shares were issued at $75 per share, which means the total amount received was $7,500 (75 x 100). Therefore, the capital surplus is $2,500 ($7,500 - $5,000).

If 100 Shares of $50 Par Value Stock Were Issued