Rome Corp.was organized on January 1, 2017, with the following authorized share capital:
20,000 common shares, no par value
6,000, $.05, cumulative preferred shares, no par value
During 2017, the corporation issued 10,000 common shares for $350,000 and 5,000 preferred shares at $24 per share.On December 20, 2017, subscriptions for 1,000 preferred shares were taken at a purchase price of $30.These subscribed shares were paid for on January 2, 2018.What should Rome report as total contributed capital on its December 31, 2017, balance sheet?

Question

Quizplus · Accepted Answer

Common shares issued during 2017 = 10,000
Total amount received from common shares = $350,000
Preferred shares issued during 2017 = 5,000
Total amount received from preferred shares = 5,000 x $24 = $120,000
Preferred shares subscribed but not yet paid for = 1,000 x $30 = $30,000

Total contributed capital = amount received from common shares + amount received from preferred shares + subscribed but unpaid preferred shares
= $350,000 + $120,000 + $30,000
= $500,000

However, since the subscribed preferred shares were not paid for until January 2, 2018, they are not included in the December 31, 2017, balance sheet. Therefore, the correct total contributed capital to report on the December 31, 2017, balance sheet is:
= $350,000 + $120,000
= $470,000

Thus, the best choice is (C).

Rome CorpWas Organized on January 1, 2017, with the Following Authorized