Frieds Corp. was organized on January 1, 2020, with the following authorized share capital: 20,000 common shares, no par value
15,000, $ .10, cumulative preferred shares, no par value
During 2020, the corporation issued 10,000 common shares for $ 700,000 and 10,000 preferred shares at $ 28 per share. On December 20, 2020, subscriptions for 1,000 preferred shares were taken at a purchase price of $ 30. These subscribed shares were paid for on January 2, 2021. What should Frieds report as total contributed capital on its December 31, 2020, balance sheet?
A) $ 280,000
B) $ 700,000
C) $ 980,000
D) $ 1,130,000

Question

Quizplus · Accepted Answer

The total contributed capital includes the amount received from issuing common and preferred shares. For common shares: 10,000 shares x $70 = $700,000. For preferred shares: 10,000 shares x $28 = $280,000. Subscribed shares are not included until paid. Total = $700,000 + $280,000 = $980,000.