Vegas Finance Company reported the following: Common stock, $10 par, 100,000 shares authorized, 80,000 shares issued and outstanding
What is the effect of issuing 1,000 shares of common stock at $15 per share?

Question

Quizplus · Accepted Answer

When a company issues shares above par value, the excess amount over par is recorded in Additional Paid-in Capital. Here, the shares are issued at $15 each, with a par value of $10. The excess ($5 per share) for 1,000 shares equals $5,000, which increases Additional Paid-in Capital.

Vegas Finance Company Reported the Following: Common Stock, $10 Par