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 stockholders' equity was

Question

Quizplus · Accepted Answer

The total amount of common stock issued during 2012 is (30,000 x $25 per share) + (10,000 x $20 per share) = $950,000. 
The par value of the common stock is 50,000 x $10 per share = $500,000. 
The amount of additional paid-in capital is $950,000 - $500,000 = $450,000. 
Retained earnings increased by the net income of $33,000 and decreased by the dividend of ($0.50 x 40,000 shares) = $20,000, resulting in an increase of $13,000. 
Therefore, the total stockholders' equity on December 31, 2012, is ($500,000 + $450,000 + $13,000) = $963,000.

Martin Corporation Was Organized on January 3, 2012