Martin Corporation was organized on January 3, 2012. Martin was authorized to issue 50,000 shares of common stock with a par value of $10 per share. On January 4, Martin issued 30,000 shares of common stock at $25 per share. On July 15, Martin issued an additional 10,000 shares at $20 per share. Martin reported income of $33,000 during 2012. In addition, Martin declared a dividend of $.50 per share on December 31, 2012.
See Martin Corporation information above. The amount reported on Martin Corporation's December 31, 2012, balance sheet as additional paid-in capital was

Question

Quizplus · Accepted Answer

To calculate the additional paid-in capital, we need to add up the amounts received for the shares issued in excess of par value.

30,000 shares issued at $25 per share = $750,000
10,000 shares issued at $20 per share = $200,000

Total amount received = $950,000

We then subtract the par value for all shares issued:

30,000 shares x $10 par value = $300,000
10,000 shares x $10 par value = $100,000

Total par value = $400,000

Finally, we subtract the par value from the total amount received:

$950,000 - $400,000 = $550,000

Therefore, the amount reported on Martin Corporation's December 31, 2012, balance sheet as additional paid-in capital was $550,000.

Martin Corporation Was Organized on January 3, 2012