Eff Ltd.was organized on January 2, 2017, with 100,000 no par value common shares authorized.During 2017, Eff had the following capital transactions:
Jan 5 Issued 75,000 shares at $14 per share
Jul 27 Purchased and retired 5,000 shares at $10 per share
Nov 25 Issued 4,000 shares at $13 per share
What would be the balance in the Contributed Surplus account at December 31, 2017?

Question

Quizplus · Accepted Answer

Contributed surplus is the difference between the issue price of the shares and the par value (if any). In this case, since there is no par value, the entire amount received above the issue price is considered to be contributed surplus. 
Total amount received for issuing 75,000 shares = 75,000 * $14 = $1,050,000 
Total amount received for issuing 4,000 shares = 4,000 * $13 = $52,000 
Total amount received = $1,102,000 
Total amount paid to retire 5,000 shares = 5,000 * $10 = $50,000 
Net amount received = $1,052,000 
Contributed surplus = $1,052,000 - (75,000 * $14) - (4,000 * $13) = $20,000

Eff LtdWas Organized on January 2, 2017, with 100,000 No Par